Mind the gaps on building safetyPosted: March 11, 2022
Originally published as a column for Inside Housing.
Who is guilty, who is innocent and who is merely collateral damage? The answers, when it comes to building safety, are not as simple as it first seems.
Guilt in a legal sense remains to be seen but just about everyone involved in the refurbishment of Grenfell Tower seems to bear some responsibility, starting with the governments that set the building regulations and reaching down via organisations involved in product testing and certification and building control to the companies that supplied the cladding and insulation, the contractor, designers, subcontractors and client.
All of the above plus developers are seen as ‘guilty’ when it comes to the wider building safety crisis while leaseholders are the innocent parties that the government has finally accepted should be protected from the costs.
And yet scratch a little deeper in the debates over the Building Safety Bill and the new approach initiated by Michael Gove and the dividing line between innocent and guilty is not remotely as clear cut as that.
For starters, some of those seen as responsible are harder to hold to account than others. UK-registered developers are being asked to pay for more than just their own buildings because other blocks were built by developers who are registered overseas or have gone bust. The parent companies of the three product suppliers highlighted repeatedly at the Grenfell inquiry are registered in France, Ireland and the United States.
The innocent are not being entirely protected either. Despite what Gove said in his first statement about it being ‘morally wrong’ to ask them to pay, many could still be in the hook for up to £10,000 (£15,000 in London) for non-cladding costs on blocks where the original developer cannot be found.
Neither the cap nor the promise they will have to pay nothing to fix cladding applies to innocent leaseholders who have already paid or those who have successfully enfranchised to own a share of the freehold. Leaseholders in buildings below 11m get assurances there should be no problem rather than legal protection.
MPs on the all-party Levelling Up, Housing and Communities Committee call for a change of heart on all of these points in a report published today (Friday) that accuses the government of creating a ‘bizarre lucky dip’ in which some innocent leaseholders will pay nothing, some will pay the capped amount and some will pay well in excess of the cap.
They also warn that companies could ‘rush to invoice leaseholders’ before the Bill gets Royal Assent and that the government is ‘doing nothing more to support people in this position than advising them to withhold payment’.
Buy to let landlords are protected if they only own one flat but on their own for any more than that – potentially leaving a big liability gap in blocks where lots of flats are owned by landlords.
Housing associations seem to be innocent and guilty at the same time: blameless and protected from costs if they acquired blocks via Section 106 agreements but responsible and on the hook for hefty costs if they developed the blocks themselves.
Many people will be reading this to a soundtrack of tiny violins: after all, landlords can outbid would-be first-time buyers for homes and then charge them more in rent while housebuilders have enjoyed surging, taxpayer-assisted profits, bonuses and dividends.
And housing associations have joined the ‘usual suspects’ in the dock for their treatment of their shared owners when it comes to fire safety: a survey of leaseholders published last month by End Our Cladding Scandal found that ‘an overwhelming number….highlighted a combination of lack of information, poor quality communication and being completely ignored or stonewalled by their housing association as a major stress factor’.
They also reported contrasting treatment, with some associations paying costs not covered by the Building Safety Fund (BSF) and others not, some charging in proportion to the share of ownership but most charging 100 per cent and some giving leaseholders time to pay while others demanded payment within 30 days.
Yet all of these groups have a point when it comes to fire safety. As Tory peer Lord Naseby put it when the Lords debated the Bill last week, the government’s treatment of landlords is ‘introducing a very dangerous principle, basically stating that there are worthy and unworthy victims of the cladding crisis’.
The latest letter to Gove from Home Builders Federation (HBF) chairman Stewart Baseley complains that only a minority of the blocks affected were built by its members, yet they are the ones being threatened with the loss of their ability to do business.
The HBF has also challenged the government on its £4 billion estimate of the cost of fixing mid-rise buildings, on the amount of money that will be raised through the Residential Property Developer Tax and on cost control for the BSF for high rises.
The response from Gove continues the semi-public negotiations and repeats his threat to impose a solution through the Building Safety Bill if no agreement can be reached by the end of March.
Regardless of how much of that we can dismiss as self-serving, it is frankly incredible that almost five years on from Grenfell we still don’t know how many buildings are affected and how much it will cost to fix them. MPs on the Levelling Up Committee say they are ‘baffled’ that nobody can come up with accurate information on this.
Unlike housebuilders, social landlords cannot pay for building safety out of lower profits, executive bonuses and dividends.
As Lord Lytton put it in the House of Lords last week: ‘It is indefensible that liability for defects should depend on the status of the injured party or the nature of their tenure, as if wrecking somebody’s pension pot or a social landlord’s finances in in some way acceptable, when for the homeowner it is not.’
He is of course one of the peers proposing amendments to introduce a ‘polluter’ or ‘perpetrator’ pays principle into the Building Safety Bill.
Building safety minister Lord Greenhalgh is resisting the amendments and claims he is adopting a ‘pick and mix approach’ that will incorporate elements of both.
But he combines that with a particular view about who should count as a perpetrator, telling an NHF conference that associations should be made to pay for the ‘rubbish’ buildings they have developed.
He used the same striking rhetoric in the House of Lords last week to justify his refusal to exempt social housing from the Building Safety Levy: ‘The levy should apply to people who have polluted irrespective of whether they are a council, a social housing provider or a private developer, because they oversaw and built rubbish.’
This despite the acknowledged role of successive governments in the deregulation that created the conditions for the ‘rubbish’ to be built in the first place and of construction companies in exploiting it.
As things stand, the collateral damage will be reduced budgets for improvements and new homes and the price will effectively be paid by tenants and people on the waiting list for an affordable home who will not get one.
The Levelling Up Committee says ‘the government must stop putting the building safety crisis against the housing crisis’, that social landlords must have full access to its Comprehensive Building Safety Fund and that the government must commit to protecting the Affordable Homes Programme at its current level.
Michael Gove’s new approach is a big step forward on building safety but it is still full of gaps – and time is running out to fill them.