Fire Safety and Cladding Remediation Costs.

The £1 billion Building Safety Fund, alongside the £600 million in funding already provided for the removal of Grenfell-style ACM cladding, will help remove unsafe cladding on high-rise residential buildings, protecting leaseholders from remediation costs. This funding should mean that banks and mortgage lenders have certainty that remediation costs for these buildings will be paid for. The deadline for the fund has been extended to June 2021.
The Building Safety Bill will introduce a new era of accountability, making it clear where the responsibility for managing safety risks lies throughout the design, construction and occupation of buildings in scope. There will be tougher sanctions for those that fail to meet their obligations.
The Bill also includes provision for the building safety charge which is designed to give leaseholders greater transparency about the costs incurred from maintaining a safe building. These costs would otherwise be recovered from the annual service charge as per the terms in most leasehold agreements. The Bill includes a number of protections, including allowing the Government to limit the scope of what can be recovered from leaseholders.
Under the new statutory terms, the landlord commits to the leaseholder to carry out the necessary measures, apply for any available financial support and observe the statutory requirements in relation to raising charges. In return, the leaseholder commits to the landlord to pay a fair share of reasonable charges and co-operate with the building safety regime.
I was glad to learn that Ministers are particularly committed to looking further at the question of costs throughout the process of scrutiny and as the Bill is finalised for introduction. A senior adviser to the Government has been asked to accelerate work with leaseholders and the financial sector. Barriers must be removed to fixing historic defects and identify financing solutions that protect leaseholders from unaffordable costs.
I welcome the new £30 million Waking Watch Relief Fund to cover the cost of fire alarms to reduce dependence on costly waking watches. The National Fire Chiefs Council have been clear that building owners should move to install common fire alarm systems as quickly as possible, which will reduce costs for affected leaseholders.
I have been following this important legislation and I am aware of amendments to the Fire Safety Bill prohibiting the passing of remediation costs on to leaseholders and tenants. I entirely support the intention of an amendment to protect leaseholders. However, for a number of reasons I do not support the amendment itself.
Most importantly, the Fire Safety Bill is not the correct place for remediation costs to be addressed. The Government has already committed that it will provide an update regarding remediation costs before the Building Safety Bill returns to Parliament. In addition, work is underway with leaseholders and the financial sector to identify financing solutions that protect leaseholders from unaffordable costs while ensuring that the cost does not fall entirely on taxpayers. I hope we can agree that it is important not to interrupt these discussions. Therefore, I fear this particular amendment could lead to unnecessary confusion.
After speaking with ministerial colleagues, I know they recognise the difficulties some people are facing on mortgages and expect lenders to do all they can to unblock these issues for leaseholders.  The Government does not support the blanket use of External Wall System Review forms and encourage lenders to accept equivalent evidence that demonstrates buildings are safe for valuation purposes. Owners of flats in buildings without cladding will no longer need an EWS1 form to sell or re-mortgage their property – thanks to an agreement reached between the Government and the Royal Institution of Chartered Surveyors (RICS), UK Finance and the Building Societies Association.
Further, the Government has announced nearly £700,000 to train more assessors, speeding up the valuation process for homeowners in cases where an EWS1 form is required. This training will be delivered by RICS from January and will mean up to 200 additional assessors will be qualified to carry out the EWS1 assessment within a month, 900 within 3 months, and 2,000 within 6 months.
The Government is also exploring ways to address ongoing concerns around the availability of professional indemnity insurance and I know it welcomes industry’s progress on developing a portal where lenders, valuers and leaseholders will be able to find out if their building already has an existing EWS1, thereby reducing the demand for duplicate forms.


Issue date:  25/02/2021