Building Safety Bill

Written evidence on the Building safety Bill submitted by Paul Bullock.

(BSB02)

1. Written evidence submitted by Paul Bullock acting in my own capacity

2. Introduction – Leaseholder in a block of flats. Found to have been built outside of building regulations. I am submitting this evidence as this bill is not only discriminatory it has clearly been written through the lens and benefit of a developer and/or industry without regard for the consumer/leaseholder.

3. Executive Summary

3.1. The Building Safety Bill, whilst trying to project forward is creating untold and unimaginable consequences by failing to recognise and account for today’s reality. This is particularly evident as it tries to overlay new approaches to existing developments resulting in a reactive, kneejerk management approach by govt rather than an holistic forward looking management approach to equally deal with past failures of regulators and developers as well as ensure future developments are fire safe.

3.2. As a consequence, the bill is sadly deficient in many many areas driven by failure to understand the current situation or at least a failure to deal with it. It appears to have been written with preconceived ideas rather than being truly open minded and independent in its workings, resulting in foundations being built on shifting sands.

3.3. Had we not been faced with many years of industry and govt failure then the starting position would have been quite different, in fact we may not have even needed this bill, however this is not the case and this dual challenge needs resolving concurrently.

3.4. More worryingly the bill seeks to give legal amnesty to those responsible for this scandal allowing them to walk away free whilst legally punishing the only innocent party. Worse still it financially rewards those very companies causing this scandal with double profits for the same work. On no account should a blind eye to past crimes be tolerated. It’s hardly sending the right message.

3.5. Against this backdrop the following are the major shortcomings of the bill as it stands:

- Leaseholders not being treated as consumers; similar, if not greater consumer protection should be forthcoming in line with similar goods – greater protection is available when buying a toaster or a cup of coffee.

- Dealing with remediation of historical failures funded by those responsible (developers, manufacturers, and regulators) and not leaseholders. In fact the bill enshrines in law that the only party being punished is the innocent one. The govt hasn’t made a single rationale argument why thoe responsible should be allowed to walk away from their responsibility.

- Service charges are intended to cover maintenance and up keep, these were not designed or intended to fix building defects often guarantee backed

- Scope is irrational and illogical. Evidence suggests this is arbitrary and not scientific

- Opportunity to rebalance the relationship between leaseholder and all other parties has been missed – with next to no engagement of leaseholders in preliminary reports etc, thereby creating a one-sided argument. There is a complete misunderstanding of the true position leaseholders find themselves in at the hands of Managing Agents (MA), Freeholders, Insurers etc. This bill makes the only party without a voice pay for the whims and desires of all the other greed driven professions

- Routes to redress are virtually impossible to enforce, expensive, complex and are set up deliberately to put hurdles in the way. Even the costs of the Freeholder/MA in any actions are recharged to the leaseholders so we are effectively suing ourselves.

- Asset ownership. Leaseholders don’t own the physical asset or have any rights on inspection of the core building that they are being asked by all other parties to pay for.

- These other parties including the new building owner have "no true skin in the game"

- The bill drives total risk avoidance not balanced risk management. Ive even been told its too risky to have a door mat!

- No true research on the market implications undertaken, no consideration to ramifications or modelling as to impact on cities and the current owners as this bill is likely to make many toxic developments creating modern day ghettos/prisons

3.6 Additionally, whilst not directly part of this bill, this highlights the misinformation or lack of basic understanding driving decisions:

- Figures often quoted by govt are far removed from reality ergo the assumption basis are wrong e.g average cost to fix is a meaningless quote – not only is it false its also hides the true costs many are facing

- £5.1bn so called investment is in fact remediation. Its putting right what should have been right in the first place, had this been the case the figure would be zero. Its giving buyers what they were promised and have already paid for e.g. fire breaks/safety was included in the cost so in effect I’m being asked to pay twice for the same thing. Imagine a car where the actual air bag is missing. You go to the dealer who says well that’s tough – if you want me to fit what I said was there in the first place it’ll cost you as much as the whole car did to buy and ill not let you take it away without an airbag – oh and ill make another 30% profit on that work. Sounds ridiculous – well this is what you are saying and putting in place with this bill.

- The govt is profiteering from the crisis as are the companies that caused it. With VAT, Waking watch, etc etc. £5.1bn will be covered by inappropriately small levy on developers, VAT on works paid by leaseholders and tax on profits so govt isn’t investing at all.

- A massive industry of "rip-off" and unregulated services without controls or even leaseholder input such as waking watch, insurance price hikes etc has been created

3.7 In summary, there are so many systemic problems with this bill that it would be a travesty if it were to pass as it stands. These points need urgently addressing as this crisis enters its 5th year with people’s lives, careers and mental health being ruined as government dithers to do the right thing. Bankruptcies and suicides have already occurred as a direct result.

4 Building Safety Bill,

4.1 This bill clearly shines a light on the shortcomings of current systems, processes, integrity, and current problems faced. These include a total lack of accountability and ownership in developing new buildings; lack of coherent and considered approach to design and build including basic understanding of safety; money/profit driven culture at the expense of a desire for quality standards and disjointed incestual industry showing scant regard for the leaseholder other than how to maximise profits.

Sadly, reinforced and horrifically brought to life during some of the evidential statements at the Grenfell hearing. And yet there is little in this bill that gets to and addresses the root cause of these problems. Additionally, as you will be more than aware, for any change to succeed this must also deal with culture, behaviours and capability across all dimensions and factors of the end-to-end development chain and in this regard the proposals are also sadly lacking.

This is painfully visible by the number of self-serving awards the industry hands itself. One only needs to look at the number of buildings now found to have failed building regs that won awards for quality etc. These should be banned or companies publicly stripped of awards when found to contain failings.

Reminds me of a couple of sayings "using the proverbial stick is no long term solution" and current synopsis "its like herding cats" and yet this is endemic within a multi-billion pound industry that has a massive impact on people’s ability to live safely and mental wellbeing.

4.2 The bill does not deal with the fundamental issues of, or address building safety. In fact, a dangerous disconnect exists between those causing the issues and those you propose face the financial penalty for resolution. There are many apparent safety nets currently in place, all of which the bill is saying are inadequate because they have singularly and collectively failed against a backdrop of continual watering down of regulations, allowing developers to mark their own homework. Whilst the bills intentions are admirable the whole cost and financial burden falls onto leaseholders – the only totally innocent party that doesn’t own any of the building. Leaseholders are the only party in the whole build lifecycle that relies upon all other "professionals" to do their job properly before purchase. By creating this situation there will be no limits or dam to prevent the demand floodgates to resolve others failures with no real, robust process for effective recourse.

4.3 Consequently, the Bill therefore also fails to provide a realistic, ethical, fair, and consistent system for accountability and resolution. Specifically:

4.3.1 no consideration given to how existing buildings currently occupied and may contain (known and yet unknown) defects should be dealt with. This therefore directly contravenes the many ( >17) government statements/promises made in parliament and other places about freeholders/developers needing to resolve and fund existing issues without passing these charges on to leaseholders. This will enable an open season of assault on leaseholders with no protection.

4.3.2 premise that leaseholders are accountable and responsible for the infrastructure of the building i.e. for something they don’t own, didn’t build, didn’t design, didn’t choose the materials or have any input into or even purchased.

4.3.3 goes directly against the principle of all other consumer protection laws where the ethos is that the manufacturer, seller etc is responsible for failures in their products – recent high profile examples include e.g. Cars where public were misled over emissions; washer dryers catching fire due to faulty components – these had to be put right by the appropriate party, and not the buyer, at their expense and potentially go beyond the minimum to rectify (a seller not buyer led resolution).

4.3.4 no rationale as to why the government is choosing to undermine these basic consumer principles on what is arguably someone’s largest lifetime expense with no escape route

4.3.5 looking into the future implementing this proposal as it stands there is a real potential for leasehold houses/flats to become future slums as they become "leper" buildings.

4.3.6 for proposal to be effective every purchase or sale of a leasehold flat would require an intrusive survey of the building as you are proposing a leaseholder should not trust anything by any other professional least of all a developer. However fundamental flaw a leaseholder is unable to do this type of survey! So what do they do?

4.3.7 will potentially create a fear that will last a lifetime including into retirement and perhaps even beyond the grave (how does an executor sell an asset that’s worthless that may incur costs and cant even hand it back) it would be a strange indictment on this government if someone’s property became a liability. How are large, unexpected invoices to be paid especially when its for someone else’s failing when potentially on a state pension with 28 days to pay unexpected and uncapped bill demands?

4.3.8 the bill detrimentally affects and penalises a small demographic of society specifically younger people or first-time buyers who were unable to afford the expense of a house or freehold building. This strikes at the heart of the government’s commitment to level up society

4.3.9 leases were not written for this type of expense or failures in mind and are predominantly there for regular maintenance and services, not design or build flaws. Indeed, the freeholder owns the building and collects ground rent and yet under this proposal holds no risk for the asset they own. Money for nothing.

4.3.10 no ethical standards are proposed or contained within the bill e.g. creation of Chinese walls between major process steps ensuring impartiality and no undue influence – perhaps include a cessation of all political donations by developers and a clear independence from companies involved with the build process to ensure fair and impartial outcomes. Without this any process will always be viewed with scepticism and open to abuse.

4.3.11 NHBC, no clarity where this fits in and what its role will be. In the recent past it is clear that NHBC doesn’t work and appears to be no more than a confidence trick by the industry to get people to buy shoddy new homes using NHBC as a false guarantee to minimum standards when in effect it doesn’t undertake this role at all. Claims are often turned aside as a building wasn’t signed off by them and yet on purchase you are handed a NHBC certificate.

4.3.12 New Homes Ombudsman – this proposal is an admission that NHBC has not been fit for purpose or working. So why is it required and how can this occur without causing further confusion over role of NHBC

4.3.13 sanctions need to better reflect the importance of building safety e.g a single failure by a developer, architect or freeholder etc. renders all their works to come to an immediate stop, even potentially include buildings already erected and occupied until they prove their complete retrospective analysis demonstrating no similar reoccurrences elsewhere.

4.3.14 perhaps an option is if a building at any time is found to have failed to comply in any way such as inspections, build quality, breaches of planning permissions etc. at the time of construction then there is an automatic right to sell back the flat to the developer/freeholder at full current market value as if there was no defect which is underpinned by a government guarantee. That would certainly ensure that things are done correctly

4.4 Leaseholders as Consumers. Its worth asking, "Why doesn’t this bill ensure Leaseholders are treated as consumers". It fails to position Leaseholders as paying consumers and thereby affording rights one would expect consumers to hold. It even fails to recognise the MA whilst charging leaseholders is acting upon Freeholder’s direction. Leaseholders have little or no rights and where they do exist they are ignored and are difficult to enforce against an army of lawyers to ensure leaseholders don’t exercise their meagre rights. If a leaseholder does attempt to, then they are even left holding the cost of the legal challenge. The bill further reinforces the message that freeholders can bully and cheat leaseholders.

This bill fails to understand and therefore ignores the dynamic between Leaseholders and other parties and makes false assumptions thereby the recommendations are rudderless, toothless and of little value to the majority.

Extending the period in which a claim can be made to 15 years from 6 holds no real value as already advised by the NAO. It’s pure gesture politics at its worst. Refer recent case AVIVA lost – if they can’t win what hope do ordinary leaseholders have.

4.5 The Building Safety Charge

4.5.1 establishment of a Building Safety Charge undermines the whole principle of the proposal as this gives a convenient safety net for any earlier failings in the "lifecycle"

4.5.2 no rationale or logic to defend the need to set up yet another fund. Arguments set out are weak and ill informed.

4.5.3 proposals for the Freeholder/management company to hold funds in separate accounts – as the government acknowledge they can’t even find freeholders due to shell companies, tax havens, hiding of assets from the government etc. There is no protection from fraud and/or money just disappearing.

4.5.4 no protections are built in to prevent cost inflation. What isn’t recognised and understood is that the managing agent is representing the freeholder interests and not the leaseholders interest and act as portcullis preventing leaseholders speaking to freeholders. The level of trust between leaseholders and freeholders/managing agents is at an all-time low and on a downward trajectory as over the recent past it has become clear that the leaseholders are in fact the only group that has an interest in the building and living conditions.

4.5.5 Payment terms of 28 days from demand.

4.5.5.1 bills into 6 figures are being seen. How does the government expect and think it’s reasonable that flat leaseholders can find this sort of money within this timeframe or at all? These sorts of figures are life changing and multiple times annual average net salary and multiple times average savings for this cohort.

4.5.5.2 failure to meet this payment timescale are draconian and fraught with danger including interconnectivity to mortgage lenders, people’s careers etc.

4.5.5.3 financial standings ruined, job opportunities withheld, and mobility reduced. What consultation has happened with the mortgage industry as this may render many into negative equity and potentially need for 2nd mortgages on properties whose value has been written down?

4.5.6 proposals under which leaseholders may withhold payment are complex and probably unmanageable set of circumstances and unworkable in real world – especially as managing agents are typically unresponsive to leaseholder requests. Many leaseholders suffer because of the financial incompetence of managing agencies. For instance, there are examples of accounts being woefully delayed with errors routinely seen in allocating costs.

4.5.7 the bill contains many ambiguous statements.

4.5.8 Freeholders/management companies incompetence already results in indefensible costs being passed onto leaseholders e.g. freeholders and management companies lose many important documents pertaining to the development and are therefore unable to manage the site effectively and efficiently, which in turn causes increased costs which are passed onto leaseholders for eg items that should be under guarantee. Is it right that costs arising from these issues should be passed on to the leaseholder? – this bill allows for even more of this type of underhand behaviour.

4.5.9 any reports commissioned by MA or freeholder, paid out of service charges or funded in anyway by leaseholders, then leaseholders should have an automatic right to access them. Currently any reports are deemed to be for the freeholder often with legal leaseholder exclusion clauses. Sight of these reports would help inform leaseholders, enabling a better inclusive dialogue and strategy for dealing with issues arising.

4.5.10 Service Charges are intended for maintenance and leases were not written with the intent to apply gold leaf to freeholders assets.

Monday 1st August 2021.