Thread by @LiamSpender

1/25 Round-up of thoughts on the #buildingsafetybill

The Bill cleared Parliament earlier this evening. It will now become an Act of Parliament.

The Bill will not come into force (be legally effective) for a period of some time, perhaps years in some cases.

https://twitter.com/LiamSpender/status/1519007135065063424

2/25 Two months from the date of Royal Assent, so roughly in late June 2022, leaseholders in buildings above 11 metres will have the benefit of the so-called waterfall.

3/25 Around 40 developers have also reached an agreement in principle with the government to remediate life safety critical defects on buildings built in the last 30 years.

Binding contractual terms to implement that promise are yet to be announced.

4/25 The government also promises that an orphan building scheme, to be paid for by a levy on building control approvals, will also be set up to remediate buildings where the developer cannot be traced.

5/25 The government will conduct a consultation on how to deal with enfranchised buildings "as soon as possible"

Unfortunately, this will not stop bills being passed on to them in the meantime, although at least residents control decision making in those buildings.

6/25 There is no help for people who have already paid, or who have flats in buildings under 11 metres tall.

There is also no help for anyone who owns more than 3 buy-to-let properties.

7/25 The waterfall will apply to buildings above 11 metres (or with at least 5 storeys).

As above, it will come into force from late June 2022.

Leaseholders in those buildings cannot be billed for cladding costs.

Protection is backdated to 14 February 2022.

8/25 For non-cladding costs, the expectation is that the developers will pay, then building owners.

Building owners have to pay if they have net assets of £2 million per affected building, although the limit can be changed so may be less (or more) than that amount.

9/25 For these purposes "building owner" means whoever is entitled to enforce payment of the service charge.

This captures RMCs and RTMs, whose only source of funds is their leaseholder shareholders, from whom they can (theoretically) demand unlimited amounts.

10/25 It is unclear if the government's review of cost protection for people living in enfranchised buildings will also cover the inevitable RMC and RTM issues.

11/25 Leaseholders can be called upon to pay between £10,000 and £100,000 in non-cladding costs.

That is subject to a number of restrictions.

Leaseholders in flats worth less than £175k outside London (£325k inside) cannot be requested to pay anything for non-cladding costs.

12/25 Flats worth between £175,000 and £1 million outside London may attract a charge of up to £10,000 for non-cladding costs.

Flats worth between £325,000 and £1 million in London may attract a charge of up to £15,000 for non-cladding costs.

13/25 Shared Owners pay only their share of the equity toward the cap, but the full value of the property determines whether the cap applies.

For example, someone with a 50% share of a flat worth £325,000 may have to pay up to 50% of £15,000, so £7,500.

14/25 "May" is important: the caps only kick in if the developer and building owner does not pay.

Leaseholders with flats worth above £1 million but less than £2 million may have to pay up to £50,000.

Flats worth above £2 million may have to pay £100,000.

15/25 Also, certain costs paid in the last 5 years (for example, waking watch) can be set-off against the caps.

Valuation for the purposes of the caps is to be by a method to be set out in a regulations in the next 2 months.

16/25 The Bill says this means a flat bought before 2022 will have its purchase value uprated by the House Price Index produced by the Land Registry.

There is much fighting to be done for leaseholders over secondary legislation, the valuation mechanism being just one example.

17/25 There will also be big fights how Part 4 (the new occupation regime) is to be implemented.

That carries the risk of huge costs for leaseholders if it is done in the way favoured (and advocated for behind the scenes) by industry lobby groups such as ARMA and IRPM.

18/25 Labour attempted to insert an amendment into the Bill this evening to limit leaseholder non-cladding costs to no more than £250.

This was defeated by 209-187, results here:

votes.parliament.uk/Votes/Lords/Di…

19/25 Senior Tories Lord Young of Cookham and Lord Blencathra defied their party whip by abstaining.

Conservative peers were told (whipped) to vote against the amendment.

Interestingly, one Lord Pannick voted against this amendment.

20/25 Lord Pannick received press coverage earlier this year when Taylor Wimpey referred to his legal advice that the government's threat to deny planning permission to developers who did not pay was illegal.

thetimes.co.uk/article/gove-t…

21/25 Taylor Wimpey has since signed the government's proposed heads of terms and says it estimates it will need to spend £280 million to remediate all buildings above 11 metres it has built in the last 30 years:

taylorwimpey.co.uk/-/twdxmedia/fi…

22/25 I stress that Lord Pannick has broken no rules of the House of Lords or the Bar Standards Board by voting on legislation related directly to a matter on which he has advised a client previously.

Indeed, he may have voted against simply to avoid another round of ping-pong.

23/25 The question is whether it is satisfactory for lawyers sitting in Parliament to speak and vote on legislation affecting their clients?

I would argue not, but that is not what the current rules of the House of Lords say.

24/25 Tonight's result is disappointing, but not unexpected.

The fight moves on to ensuring that the new law is implemented in a way that suits leaseholders, not vested property interests.

Those left out of the current law will also continue their fight for protection.

25/25 There is still a lot that is worth advocating for.

The government will be held to account for its promises this evening that the majority of leaseholders will pay nothing, or less than the caps.

Our fight goes on.