June 28th was anxiously awaited by millions of leaseholders across the country. It marked the date at which the protections in the Building Safety Act came into force, past which no leaseholder (in a building above 11 metres) could be given a bill to replace the flammable cladding on their building.
The Building Safety Act also provides for the remediation of buildings with non-cladding ‘life critical defects’. Leaseholders, millions of whom have been trapped in unsellable flats with major fire safety defects and facing six-figure bills per flat to make their homes safe, hope that the Act will bring about an end to their nightmares. And for many it does.
However, with its numerous loopholes and caps, the Act’s cost protections have been described as a “bizarre lucky dip” for leaseholders. Further, rather than raising British fire safety standards to prevent another Grenfell, the Act leaves leaseholders holding the can for an expensive fire safety bureaucracy post-construction, rather than ensuring that buildings are built in the first instance to the basic fire safety standards required in almost every other developed country.
There are undoubtedly several positive aspects in the Building Safety Act and Michael Gove’s department deserves praise for their revisions to the initial Bill. For example, the Defective Premises Act’s limitations have been extended from six to 30 years; it is an offence to give any leaseholder in a building above 11m a bill to remediate flammable cladding; it creates an independent Building Safety Regulator to oversee the safety of buildings; and it sets up a construction products regulator.
Sadly, with regard to other promising headline provisions, many caveats swiftly follow.
For example, The Building Safety Act sets out that leaseholders in buildings with ‘life critical’ non-cladding fire safety defects (such as wooden balconies, missing/defective fire breaks, missing/defective smoke vents, etc) will not be required to pay anything to make their buildings safe. Except if the leaseholders live in a building under 11m (even though fires have taken hold of sub 11m buildings in under 11 minutes, such as the Berkeley-built Worcester Park development).
And except if the leaseholder owns a share (no matter how small) in more than three properties. And except if the leaseholders own their freehold and the developer is unable to pay. And except, more broadly, if the developer cannot be made to pay (for example, it may be domiciled offshore or have dissolved) and the freeholder does not meet the government’s affordability test (a seemingly easy task for corporates engaging in transfer pricing).
In these cases, leaseholders will bear the costs to fix these non-cladding defects, but they will be subject to a cap. Flats valued below £325,000 in London and £175,000 outside of London will not have to pay anything. This may initially sound fair, but as always, the devil is in the detail.
For example, the caps are structured on a cliff rather than a graduated basis. Flats above these thresholds will pay £10,000 (outside London) and £15,000 (within London) unless the value is over £1,000,000.
However, at even £1 over the £1 million threshold, the leaseholders cap more than triples to £50,000. This is troubling given the current average flat price of £1,062,000 in Central London and particularly so when considering how the government is proposing to calculate the value (using the purchase price plus the housing price index).
This is astonishing given that studies have shown open market values are 50 per cent less for flats with failed EWS1s. (An EWS1 is a certificate from a fire safety engineer assessing the safety of external wall materials on high rise blocks of flats. A passing grade on this form is required by mortgage lenders to approve lending against these flats).
England lags behind in high rise building fire safety
On the heels of the fifth anniversary of the tragic Grenfell fire, it was hoped that the Building Safety Act and the Fire Safety Act 2021 would help to establish England into a world leader for fire safety.
Instead, the Acts provide for little improvement in terms of safety standards and instead require leaseholders to pay for an expensive fire safety bureaucracy that is largely redundant and should be unnecessary if the proper inspections and certifications were completed in the first instance.
For example, multiple fire escapes are a key aspect of fire safety because of the location of a fire, because smoke vents may fail (as experienced in the New Providence Wharf fire) and because there needs to be sufficient space to accommodate fleeing residents descending the stairs (some of whom may have young children or mobility issues), as firefighters simultaneously ascend the fire escape of the building.
However, the UK has no requirement for a second egress where a stay put strategy is recommended. In contrast, multiple fire escapes are required for buildings above two storeys in Canada; above four storeys in the US and Ireland; and above 15m in India and the Netherlands.
To put it into perspective, the Grenfell Tower was 24 storeys and buildings over 50 storeys with only one fire escape have recently been approved in central London.
The same is true of smoke alarms; the UK does not require wired smoke alarms outside of individual flats. Other developed nations require all new builds to have carbon monoxide, smoke detectors and strobe alarms hard wired in every storey and sleeping area. This is regardless of whether a stay put policy is in place.
Accountable person likely to prove costly for leaseholders
The Building Safety Act requires that there be an Accountable Person who has overall responsibility for building safety and can be held criminally liable. Where buildings are mixed use, this may prove extra costly, as there may need to be several people appointed (one per building lease).
Initial drafts of the Building Safety Bill also proposed that each building over 18m should have a Building Safety Manager (reporting to the Accountable Person); the Department for Levelling Up, Housing and Communities estimated the cost for this role at an average of £60,000 per building per year.
The Building Safety Manager role title has since been removed, but the responsibilities remain. These responsibilities include undertaking an annual inspection of the external wall system and reviewing fire doors (including individual flat front doors) every six months.
If the construction products and installation are properly certified and inspected in the first instance, this costly frequency of inspection should be unnecessary. Focus should be on key fire safety measures that we know save lives, such as wired smoke detectors, multiple egresses, functioning smoke vents, etc., rather than the mundane and trivial endeavours included in the responsibilities, such as removing door mats (as they may represent a trip hazard).
Mental health crisis
The building safety crisis has been devastating for leaseholders. It has resulted in a mental health crisis, with 90 per cent reporting a deterioration in mental health and 23 per cent reporting thoughts of suicide or self-harm.
Leaseholders have emptied their savings to pay for waking watches, insurance premiums that have skyrocketed by over 1,000 per cent (yes, 1,000 per cent) and for expensive variable rate mortgages that they’ve needed to take because they’ve been unable to remortgage.
In the face of government and corporate indifference to their plight, leaseholders across the country have mobilised. They have formed action groups at the local and national levels; they have come from all over the country to protest in front of Parliament; they have launched social media campaigns; they have been sounding the alert over shockingly unsafe building planning approvals; and they have been bravely telling their stories of mental health struggles and bankruptcy to the media to try to shame the government into action.
While acknowledging that Michael Gove has gone much further than any of his predecessors, leaseholders are not prepared to accept a ‘lucky dip’ approach that leaves so many facing large bills. Leaseholders expect legislation that universally frees them from the bills resulting from the poor regulation and corporate malfeasance that caused this crisis.
Leaseholders are now also acutely aware that Britain is a laggard in fire safety globally and are determined to ensure that this changes to prevent any further building safety scandals or Grenfell tragedies.
Lastly, leaseholders are unprepared to accept the imposition of a costly safety bureaucracy that not only puts the cart before the horse but also charges leaseholders to build an elaborate fence after the horse has bolted.
Lucy Brown is an Affected leaseholder writing for the UK Cladding Action Group
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