Building Safety Bill

Supplementary written evidence submitted by the National Housing Federation (BSB44)

Dear Public Bill Committee ,

Thank you for your patience in hearing from the NHF in response to a question asked by Ruth Cadbury MP when we gave evidence to the Public Bill Committee last month.

We were asked :

Would an indemnity scheme on freeholders, developers and builders t hat paid out to fund remediation work be more transparent and easier to claim f rom than the current system?

Having taken time to consider the question, we believe that the transpar enc y and e ffectiveness of an indemnity scheme , comparative to the current Building Safety Fund, w ould be dependent on the details of such a scheme.

T he costs of ensuring resident safety in the housing association sector is projected to exceed £10bn. W hile this is housing associations’ top priority, remediation costs will likely impact on the sector ’s ability to invest in the future supply of affordable housing, and in existing residents’ homes and communities. We therefore believe that the government should provide upfront funding for all buildings that require safety works, then recoup the costs from those responsible once remedial works are complete. Such an approach would provide a huge number of benefits, not least in helping to overcome the financial barriers to remediating buildings that housing associations and some other building owners are facing.

With regard to the suggestion of an indemnity scheme, we recognise that it is useful to consider all possible means of generating funding from those responsible for defective properties . However, i t would be many years before such a scheme accumulated enough resources to make a meaningful impact on the total costs of remediation. Moreover, the premi se raises some questions for our sector, including whether housing association s would be required to pay into such a scheme, when many housing association buildings wer e been commissioned from developers, and bought by our members in good faith. There is also the question of whether housing associations would receive funds from an indemnity scheme , as social landlords can currently access the Building Safety Fund only for the proportion of a building live d in by leaseholders . This means that social housing tenants - people on some of the lowest incomes in the country - are effectively paying to resolve th is part of the building safety crisis .

W e would argue that only the g overnment is in a position to make funding available now , on the scale required to cover the remediation costs of social landlords. While building owners - including housing associations - are pursuing developers for costs where the developer retains legal liability, we believe that the government is in a significantly stronger position to carry out this process, negotiat ing settlements collectively . While an indemnity scheme could provide a means of recouping costs, it might also take funds from organisations with no responsibility for the building safety crisis.

In addition, the government is the only agency that can coordinate the limited resources needed to remediate buildings and direct them first to the buildings that need them most. Both financial and operational resources should be allocated on a risk basis , as th is is the most effective way to ensure resident safety . O nly the government c ould conduct this strategic coordination.

Yours sincerely ,

Kate Henderson
Victoria M o ffett

National Housing Federation

8 October 2021