Building Safety Bill

Written evidence s ubmi tted by Jennifer Melmore , affected leaseholder (BSB43)

1. Introduction

2. Protection for Leaseholders from unfair costs

3. Building Safety Charge

4. New Homes Ombudsman

5. A better solution

6. Conclusion

1. Introduction

1.i I am an affected leaseholder, facing ruinous costs if this Bill passes unamended.

1.ii. This Bill is being brought to the House, allegedly to ameliorate the shocking lapses in building safety that have been allowed to develop over the preceding decades. All residents deserve to have a home that is not a known death-trap, but the knee-jerk way the Government has gone about trying to fix this problem has seen leaseholders living with a sword of Damocles dangling over their heads asking themselves what will claim their home first – a fire their building is ill-prepared to cope with, or the ruinous financial costs associated with remediation? Speaking as a leaseholder, the thought of a fire claiming everything I have worked for is anxiety - inducing, but I know it is mercifully uncommon. The bills I am liable for, despite having bought in good faith and followed every legal check I was required to do, are a far greater cause for concern, as I know that unless this Bill is changed to protect people like me, these costs will claim my home. That is a certainty.

1.ii i These costs get out of hand quickly. Surveys, insurance hikes, waking watch charges, new alarms to compliment existing alarms, evacuation marshals (a redesignation of waking watch if a resident in the building has a PEEP), all being added to service charges before any remediation is even discussed, and currently, there is very little help for any of these costs due to the preoccupation with cladding. There have already been bankruptcies and suicides over these costs alone.

1. i v This has all been as a result, not just of negligent building practices, which this Bill seeks to address, but of Advice Notes coming directly from the Government, resulting in pointless patrols (or in our case, three men sat in a cupboard) supposedly protecting residents from fire, while exposing leaseholders to the danger of bankruptcy. It is an exercise in institutional back-covering, and this Bill does nothing to address the safety of leaseholders caught up in it.

1. v Many times during the passage of the Fire Safety Bill, amendments that would have kept the Government’s promise that leaseholders should not have to pay a penny toward making their homes safe were rebuffed , because the Building Safety Bill was the ‘proper’ place to deal with the attribution of costs. It has arrived, and there is nothing in here to protect millions of leaseholders from the reality of extortionate bills they cannot possibly pay, to fix issues not of their making.

2. Protection for Leaseholders from unfair costs

2.i On the webpage calling for evidence to the committee, it is stated that " the Bill doesn’t relieve long leaseholders of a potential liability to pay for fire safety works if their lease agreements provide for recovery of these costs." You would be hard pressed to find a new build that has been constructed that does not lay the liability for costs at the door of leaseholders and leaseholders alone .

2.ii Take the new-build, Shared Ownership block I live in. During our EWS1 survey, o ur building was found to have breached safety regulations at the time of construction , with non-compliant insulation and problems with cavity barriers that were poorly installed . Our lease means that, although Optivo , the management company acting as responsible person, bears responsibility for keeping the common parts and the exterior of the building safe and in a good state of repair, they can bill us whatever they deem ‘reasonable’ to do so. When I bought my flat, I noted that they operated a sinking fund, meaning that everyone chipped in a little extra each month so that we had a good reserve of money for dealing with unforeseen or expensive repairs, such as a new roof, which would stop us having to suddenly find a very large amount of money. This seemed sensible. At no point did it seem feasible that I would be facing charges in excess of £100,000, not for routine repair, but for correcting dangerous flaws that meant the block should never have passed inspection by Building Control.

2.iii Our block was completed in 2005, meaning that even the extension to fifteen years of the Defective Premises Act 1972 and the Building Safety Act 1984 (section 38) would not help us. That is assuming that the developers that built the building were still around to sue, but unfortunately, the y followed a very common model whereby a separate company is opened up per project, and closed as soon as the freehold is sold, making it very difficult to be sued for any issues that are discovered at a later date. The parent company, Oakmayne , also disappeared not long after Grenfell and was struck off at Companies House for not filing its accounts. These are the practices behind many unsafe buildings, and the Building Safety Bill gives no improvements to the rights of the thousands of leaseholders stuck in them.

2. iv Our landlord, Optivo , who has a headlease to run the property from the freeholder Aviva, tells us they’ve been working hard to find ways to fund the remediation from sources such as insurance, but they have been vague about what they’ve done and, due to lax legislation, don’t have to give us very many details . Even if Oakmayne were still around to sue, we would have to rely on Optivo to do that because, as the law currently stands, a leaseholder cannot sue until actual harm has been caused by negligent building standards. Leaseholders are left in the unenviable position of living in buildings so dangerous they have to be patrolled 24/7 by waking watches, and yet have no power to sue unless their buildings actually burn down . E ven then, it is not straightforward, as the victims of the Worcester Park fire in 2019 have discovered.

2.v In this way, this proposed change would actually protect very few leaseholders. If the trigger mechanism to start the 15 years was not completion of the dwelling but knowledge of the defect it may help more people, but it ignores the plight of every leaseholder whose developer followed the protectionist ‘company per project’ model, or subsequently went bust.

3. Building Safety C harge

3.i I have major reservations that the legislation being put forward for this charge will a) not be open to abuse to force onerous charges onto leaseholders and that b) the charge will be in the region of the estimated £16.

3.ii Firstly, for some leaseholders already pushed to the brink by insurance hikes, waking watch charges, and other amounts causing their service charges to spiral out of control, £16 a month is not an insignificant sum, and may well be the straw that breaks the camel’s back. Given the accuracy, or lack thereof, of data pertaining to all elements of the building safety crisis, you will forgive us for being sceptical. At one point, MHCLG was circulating documentation stating that the average amount a leaseholder would have to pay toward remediation was £9,000. As leaseholders, we can tell you that is pure fiction. The waking watch in my building, instituted in July 2020 as result of Advice Notes coming from the Ministry, was being charged at a rate of £48,360 + VAT per month to be shared between 25 flats, 12 of them leasehold. That meant that my flat had attracted a charge of approximately £9000 by November 2020, before any remediation had even been discussed with leaseholders. Legislating for yet another charge that can be used to financially abuse leaseholders and dressing it up as ‘safety’ is abhorrent and wrong, and will do nothing to improve actual safety for residents.

4. New Homes Ombudsman

4.i I have reservations about the practicalities of only allowing a two-year time period from time of buying from a developer to forward complaints to the proposed NHO. A wealth of structural issues may not be apparent within this time frame. Our building survived a fire in which a resident died, and yet it took an intrusive external wall survey fifteen years after completion to determine that the insulation was illegal and that cavity barriers were incorrectly installed. When buying a new build property, doing all the necessary legal checks such as conveyancing and surveys, will not bring issues to light like those structural issues that hundreds of thousands of us have recently discovered blight our buildings. Sadly, a major disaster or intervention is usually required to discover the extent of the very issues the NHO would be involved with, and the likelihood of that being within two years is not high.

5. A better solution

5.i I see nothing in the Building Safety Bill that would establish a scheme or body that would be of genuine use to leaseholders caught up in the building safety scandal, or protect the next generation of home buyers from uncovering similar negligent processes in the future .

5.ii What we need is an industry-wide scheme such as the FCIS for banking , or the ATOL scheme for package holidays . How can it be right that we, as a society, deem being stranded abroad with no return ticket sufficiently devasting that we have the ATOL insurance scheme for customers to ensure that does not happen, and yet we have no recourse for leaseholders who have been mis - sold dangerous buildings ? Losing one’s life savings due to banks folding is rightly regarded as devastating and we now have compensation and insurance against that happening in the FCIS (up to £85,000 per institution) , but if someone put their life savings into buying a home which, contrary to all surveys and checks done at time of purchase, turned out to be dangerous , they receive no protection , only the threat of ever increasing bills to remediate it. Meanwhile the industry which caused the problem sits reporting huge profits and dividend payments to shareholders.

5.iii The construction industry, given the prevalence of developers who open companies to build a single building and then wind them up expressly to avoid any issues with their negligence following them at a later date , needs its own insurance scheme. As with the banks and the FCIS, they should all pay in so that if one goes bust, and later a building they built is found to require remediation, the fund can finance it without having to burden the taxpayer or punish the victim. If there is one thing the building safety crisis has shone a light on, it is the scale of negligence and fraud at play in the construction industry and it cannot be right that the people who innocently bought these homes are facing financial ruin to safeguard the industry’s profits. While the small £200m a year levy (for a decade) on the construction industry to contribute to remediation costs is welcome, it does nothing to prevent this situation arising again . A permanent construction insurance scheme may, and at the very least, it wouldn’t mean bankruptcy for the victims.

6. Conclusion

6.i In its current form, this Bill is little more than a continuation of the knee-jerk reaction that has exacerbated the Building Safety Scandal for leaseholders. The disastrous EWS1 check has led to the imposition of costly waking watches, new alarm systems, evacuation management wardens, all with the cost being passed onto leaseholders who have virtually no say in what is happening to their buildings. When they have questioned how safe these measures actually make them, they are met with shrugs and told it is what the insurance companies demand. For their part in this, insurance companies have multiplied costs of cover by thousands, leading to extortionate and unpayable service charges, but when asked if this is an acceptable appreciation of the risk these buildings pose, they point to failed EWS1 checks. The only way out is costly remediation which leaseholders can ill afford, especially with monthly service charges skyrocketing in the interim. For shared owners, just two months of unpaid service charge can lead to repossession. What it amounts to is a succession of official bodies wringing their hands and saying they care about resident safety, but when questions arise about efficacy, practicality, and the very real problem of cost to leaseholders, the protests fall on deaf ears.

6.ii Residents want their buildings to be safe, but I guarantee that not a single leaseholder staring down the barrel of bankruptcy will feel safe if this Bill passes without proper protection from egregious charges that are not their fault, nor their moral responsibility.

October 2021