Building Safety Bill

Written evidence submitted by L&Q (BSB12)

THE BUILDING SAFETY BILL – L&Q Submission to Call for Evidence

L&Q is a regulated charitable housing association and one of the UK’s most successful independent social businesses. The L&Q Group houses around 250,000 people in more than 105,000 homes, primarily across London and the South East. The 250,000 residents who make their homes with us are L&Q’s priority and social purpose is central to everything we do.

Our stock profile means that as an organisation we have one of the largest portfolios of tall buildings and those most impacted by these changes. We are currently about to complete inspection on nearly 200 residential blocks above 18 meters by the end of September 2021. We are also already currently engaging in pilots and preparing for elements of the Bill. This includes working closely with the Ministry of Housing, Communities and Local Government (MHCLG) as Early Adopters and having a strong resident engagement agenda at the core of our latest strategy.

Executive Summary

L&Q fully supports the government’s ambition to bring an end to unsafe cladding without passing unnecessary costs to leaseholders. We are pleased with the progress from the first draft of the Building Safety Bill (Bill) and the opportunity to now contribute to the Public Bill Committee’s call for evidence on the second draft. As the Bill introduces a wide range of change s which will have a significant and strategic impact on L&Q’s undertakings and residents, we have significantly welcomed the development of clarity in the second draft.

L&Q broadly support the requirements outlined in the Bill and regard the overall changes that the Bill will bring as positive, with the safety and engagement of residents at its heart. The strengthening of resident responsibilities since the draft Bill is in line with our current resident engagement agenda and we are pleased that the government acknowledges building safety needs to be looked at comprehensively and holistically , rather than a series of individual strands.

Whilst preparatory work is already underway at L&Q to accommodate the new changes , we also recognise that in order for the Bill to be a success it will have to show quick and strong practical commencement while also being deliverable. A phased commencement would be advised , separating new buildings from existing buildings where information is not as easily obtained as well as by height. We would also advise en suring any commencement route has an element of flexibility to allow both the Accountable Persons and the Building Safety Regulator to find their way. We must be prepared to overcome any initial challenges that may come with the pace at which this is required such as the availability of building safety information for existing buildings.

We therefore believe a key challenge for housing associations will be ensuring the capacity to implement the changes set out in these proposals effectively. In many cases, housing associations will be simultaneously inspecting existing buildings for safety concerns and remediating any issues they identify, while also adopting a new regime for higher-risk buildings. Whilst we are keen to deliver at pace, the scale of this work and cost of impact cannot be underestimated and we ask that the government acknowledges the capacity and organisation changes that need to happen to allow this. We also ask the government to acknowledge challenges regarding lack of existing information will mean that work to existing buildings will inevitably take longer. All this work must be underpinned by consistent and effective communication with residents, and this will require the right people in place to do so.

The right legislation to address new and necessary responsibilities between building owners and occupants will be crucial and we will need to make sure we have a clear route to address this. We therefore recommend a phase d commencement at a speed which is realistic in delivery . We are also calling for support from the government for all the relevant sectors to increase capacity, while also ensuring that the practical details are included for the transition phase to ensure new regulations are adopted as diligently as possible.

Our submission to this call of evidence will be focused on the most pertinent issues impacting practical implications that the changes outlined in the Bill will bring . Our submission has been summarised accordingly to key provisions and divided into the following themes :

1.0 Establishing the Regulator and Governance

2.0 Technical Matters

3.0 Relationship with Residents

4.0 The Building Safety Levy

1.0 Establishing the Regulator and Governance

These are our comments and observations on the new set up of the regulator and regulatory landscape .

1.1 Resident Panel

L&Q are supportive of the establishment of the Residents’ Panel within the Building Safety Regulator. L&Q have recent experience of setting our Resident Services Board as part of our formal governance a n d we are already seeing how this has changed the culture of decision making in the organisation. We do not, however, believe that the term ‘resident panel’ captures the change that is needed and the roles these new groups will have.

We strongly believe the Residents’ Panel must be given a strategic remit as part of an integral part of governance of the regulator rather than a passive consultation body. Our suggestion would therefore be to call them ‘Resident Oversight Boards’ which would highlight the oversight role of the resident voice on such a group, as well as the strategic, cross-cutting roles it would have and the experience at the core of the Building Safety Act.   L&Q also believes work needs to be done to understand out how best to measure and communicate the panel’s impact and influence. This will be key to building the prestige of all tenant panels and to ensure we make best the use of residents ’ time, experience, and knowledge.   L&Q also believe that consideration must be given into how individual groups attached to a housing provider should interact with national wide tenant panels which are being l ooked at by a wide range of stakeholders in the industry . Th is include s the Regulator, Ombudsman, NHF and the " See the Person " campaign . This is critical to ensure these bodies connect with the real-life experiences of residents.  

1.2 Committee on Industry Competence

We welcome the creation at the top levels of governance of the new regulator of a committee on industry competence and note that it has wide powers to carry out analysis and research in relation to matters within its remit. At L&Q, along with many of our partners, are experiencing challenges in finding contractors for building safety works and we expect this to be a medium-term challenge at the very least and this in turn may have an impact on how newly regulated bodies are able to discharge their duties proposed under the Bill. We suggest that the committee on industry competence is given an explicit remit in monitoring the labour market in respect of competent individuals and publishing advice and guidance on the development of relevant markets to complement the powers already proposed. Without this explicit part of the remit there is a risk that the committee will focus exclusively on skills and competency frameworks without due regard to the wider market factors.

1. 3 Ombudsman Services

Through the prioritisation of residents and their safety, L&Q maintain that the housing ombudsman services will remain valuable but changes as outlined in the Bill will require appropriate legislation to address how the existing Ombudsman , proposed New Homes Ombudsman and different regulators work together.

The overall picture has created a complex landscape for residents on how their issues fundamentally will get resolved. Whilst we acknowledge that further clarity will come with the practical implementation of legislation, we strongly recommend that parliament identifies early on how clearly the systems set up will interact with each other in the best interest of the residents.

2.0 Technical Matters

These are our comments and observations on the technical landscape .

2.1 Golden Thread

L&Q are pleased to be already actively supporting and preparing for many of the requirements outlined in the current Bill. We fully support the provisions in the Bill to require the creation and maintenance of a golden thread of information to prescribed standards. As one of the first organisations to start designing and implementing a Golden Thread we have been leading the industry and are recognised as experts in Golden Thread. L&Q is lead on the Golden Thread initiative (GTI) for the MHCLG and are part of the BRAC Golden Thread working group .

However, it must be recognised that the challenges and economic impact to organisations in designing and implementing a Golden Thread cannot be underestimated . As an early adopter, we are already one year into our investment in creating the systems, policies and procedures to have a Golden Thread. T hese transitional costs and the economic impact to L&Q will be substantial with £8.6m already committed to ensure we are ready to for the creation and maintenance of a golden thread of information to prescribed standards . Initial calculations of the impact assessment on L&Q using the MHCLG Impact Assessment [1] show that the ongoing annual economic impact to L&Q and residents will be substantial. Overall, t he additional costs to L&Q will make the delivery of new social housing more challenging.

2.2 Principal Accountable Persons and Competency Standards

Overall, L&Q are supportive of the significant change in the introduction of a new role of the Principal Accountable Person (PAP) who will be legally responsible for the safety of higher-risk buildings. L&Q believes this is a sensible step to have taken to ensure that there is a sole person with overall responsibility in buildings with more than one Accountable Persons.

L&Q also welcomes the additional clarity with statutory duties sitting with the PAP; in comparison to the first draft Bill whereby some responsibilities were assigned solely to the Building Safety Managers (BSM ) . Provided we have the right organisational ability and capability, L&Q welcomes this flexible approach as it promotes shared responsibility and allows us to determine how requirements could be collectively met.

Whilst we welcome the change and flexibility responsibilities outlined for the BSMs, we question these in line with the guidelines from the Competency Working Group. We have concerns that the PAS guidance goes further than the working group and requirements of the Bill. We believe the British Standards , PAS 8673 , guidance as currently written does not currently reflect the current changes in the Bill. We maintain that further guidance will be needed for other roles including those of the PAP.

Following these changes in responsibilities, L&Q also acknowledges that we will need to change the way in which buildings are managed and would also welcome further guidance on this. L&Q are supportive of the quality checks that will be required through a BSM process and the monitoring of safety standards through regular inspections.

To date, L&Q has taken a cautious approach with regard the PAP and BSM roles due to uncertainty as to what requirements will be. We are therefore pleased that the current draft Bill provides sufficient clarity to enable us to develop our approach further.

2.3 Labour Skills

Given the current state of the labour market which is exhibiting record highs of vacancies and skill shortages, L&Q suggest that the Bill should be clear in setting standards to support the assessment of the remit of the labour market and the ability to deliver this.   We have already seen a significant skills shortage in the industry for this work, which will only be exacerbated with the new legislation requirements. We want to work with government to help ensure the appropriate training and programmes are in place to train up more in o the workforce. We believe this should be looked at alongside and complimenting a phased commencement of these rules, that will mean delivery of much needed new homes will not be significantly slowed.

2. 4 Construction Pr oducts

The regulation of construction products through the concept of ‘safety critical products’ as outlined in the Bill has been well received by L&Q. We believe this is an excellent initiative which resonates with the heart of the Grenfell tragedy where sub-standard products were place d for sale on the UK market. L&Q fully support the creation of regulations which can extend quality assurance not just for materials of buildings, but also of build quality and products.

3.0 Relationship with Residents

These are our comments and observations on the relationship with resident occupants.

3.1 Resident Empowerment and Obligations

L&Q is pleased that the Bill has flagged the need for effective two-way communication with residents commencing at the point of moving in and maintained through occupation. This aligns with the work L&Q are currently undertaking to drive a strong resident involvement agenda to consolidate how we work in partnership with residents. The changes outlined in the Bill signify how we will need to listen far more to residents’ concerns and issues and act upon them in a timely way. The strengthening of L&Q’s Resident Services Board will be a key enabler to the successful implementation of the Bill to ensure residents can take the lead in driving the business to listen to residents and acting on their views. We will also need to involve residents in major works and projects that may affect their safety and they will be part of the decision-making process. It is also welcomed that the Bill includes the responsibilities residents must ensure the safety of the building where they live, and how they will need to work with the Accountable Person. L&Q will have to ensure that behaviours which create safety issues are addressed appropriately.

L&Q accept that whilst the statutory and legal language used in the Bill can create a formal ton ality in its nature , we believe the inclusion of counterbalancing principles would prevent it from being the one being defaulted to. The Hackitt report highlighted the fundamental importance of culture change in the housing sector; moving from one where the landlord has a paternalistic or enforcement relationship with the tenant, to one where they are seen as partners. This bill and its tone, will be key to the success and start of this change in culture at L&Q.

Whil st we welcome the setting out of responsibilities of the tenants within the Bill , we believe at times this can stray in to implying residents as the cause of problems, rather than part of the solution. Without some amendments to this section , this could perpetuate enforcement-like relationships between landlords and residents rather than the necessary one of partners working together in partnership to keep buildings safe.  

L&Q would therefore welcome further detailed expectations within the plan for what residents can expect us to provide, what we will commit to consult them on, how they can make their views known and how we will measure and continually review impact. We believe these plans should be in line with the wider expectations of landlords and align with an organisation’s wider approach to resident engagement, involvement, and accountability.  

Finally, L&Q believe that the general plan should be underpinned by consistent practice. This will ensure consistent resident experience and clear expectations of staff and if there needs to be tailored plan for a specific building. The only elements changed should be those that specifically relate to that building’s plan.  

3.2 Service Charging and Capital Works Costs

L &Q acknowledge the amendments to the Landlord and Tenant Act to enable charges to be passed to leaseholders with other types of service charges for costs incurred in relation to building safety regime brought in by the Bil l. However, we have concerns about the recovery of the costs which are unable to be borne by our tenants.

As a social landlord we do not have specific control over the rental income we receive to cover the cost associated with the bill and this will inevitably have knock on impacts on our budgets set around our existing revenue. Despite certain areas being specifically excluded, the costs associated with remedying external wall systems such as cladding inspections, remediation works and associated costs including waking watch provisions, and the appointment of Building Safety Manager can now be passed on through the service charge to leaseholders.   We understand the government have created a waking watch fund which landlords can apply for , within the private sect o r . We understand that social sector buildings where the Registered Provider can evidence waking watch costs have been passed to leaseholders and where costs of installing an alarm fall on leaseholders will also be eligible. However, at L&Q we are not currently passing on any costs where we are responsible for the building. L&Q would therefore welcome further clarity on the associated costs with the Building Safety Manager.

L&Q have already committed to an external wall system (EWS) Inspection and Remediation Strategy and the setting out of duties for building owners to take appropriate measures to secure alternative funding from developers and other third parties for EWS remediation as to not pass on costs to leaseholders by default in the current Bill. Therefore, whilst these changes will not have an impact on L&Q or its leaseholders , we seek further clarifications on several points.

The Bill suggests in Schedule 7. 6 (Limitations of building safety charges) in sub paragraph (3) that the Secretary of State may make regulations if the amount to be charged exceeds an "appropriate" amount. Whilst we welcome the fact that Leaseholders have the same rights as they do for ordinary service charges such as supporting documentation and referral to an FTT on reasonableness of the charges , L&Q are concerned that this would essentially act as a cap. L&Q would welcome further details on exactly how this will be assessed and whether it will follow the levels stated in The Social Landlords Mandatory Reduction of Service Charges (England) Directions 2014.

L&Q also note that under Paragraph 15, Building Safety Charges need to be held on trust. Under s42 Landlord & Tenants Act 1987 a Registered Provider is exempt from holding service charge monies in a trust. L&Q would welcome further clarification on this exemption.

We also note that Schedule 7.11 provides for a request for a summary of building safety costs which mirrors s21 of the Landlord & Tenant Act 1985. As a registered provider, we would have to use an external accountant to produce this, which would be costly to the leaseholders. Furthermore, Housing Association leases provide for a summary of account which negates the need for a s21 summary and we would provide annual service chargeable costs which relate to the Building Safety requirements.

4.0 The Building Safety Levy

We are pleased to see the additional funding that has been secured to fund essential building safety works which will help many households across England. We also understand that this will be a sizeable contribution and rightfully should be at least part funded by a new taxation . We generally welcome the proposal that those who make profits from new builds should contribute to this important building safety point.

L&Q welcomes the exemption of affordable housing from the Levy. Further details need to be released about this and we presume currently that it will work similar to the social housing relief for the Community Infrastructure Levy. However, the issue comes when the levy is applied to all private tenure properties, this can cause issues for Registered Providers like L&Q who use profits from private sale housing to find affordable housing. A system more like that used in the Residential Property Developer Tax (RDPT) where the total profit achieved by a developer across schemes is used to calculate potential liability. A model along these lines would recognise the cross-subsidy model used by L&Q and other Registered Providers and hence not risk loss in affordable housing delivery across all tenures.

Finally, clarity and further information is needed quickly both on the above and in relation to how the calculation method will be applied and the transitional processes. This information is needed speedily so L&Q and others can factor the additional levy and cost implications into the work we are undertaking.

L&Q will be submitting a more detailed response in the ongoing consultation on the specific nature of th e proposed Building Safety levy. We believe that more details will be needed on the levy and further work needs to be done to ensure that affordable housing is not impacted.

Final Comments

In summary, L&Q welcome the Bill and its intention but there are areas where further clarity would be helpful . This is particularly regarding practical implications such as its commencement route and the role and remit of Accountable Persons, tenants and new levels of governance such as the Residents’ Panel and the Committee on Industry Competence.

We fully support t he strengthening of resident responsibilities since the draft Bill . This in line with our current resident engagement agenda. We recognise that all the work must be underpinned by consistent and effective communication with residents. Our most recent experience of setting our Resident Services Board as part of our formal governance has already positively impacted our culture of decision making in the organisation and we look forward to working on this further in line with the agenda the Bill brings with it.

We believe b uilding safety needs to be looked at comprehensively and holistically . There are still unanswered questions about the leaseholder loan scheme, eligibility on future BSF funding, PAS 9980 guidance and w e believe the success of the Bill will lie in linking the se various strands together in a pragmatic but sensitive way , i mplemented at a suitable pace.

We look forward to continuing work ing with Government and stakeholders to shape this , but we also acknowledg e that success will rely on having the right people, skill and capacity in place . This will not come without its challenges in the current environment particularly given the state of the labour market and we must be prepared for this .

September 2021