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Building Safety Bill

Volume 820: debated on Tuesday 29 March 2022

Report (Continued)

Debate on Amendment 15 resumed.

No, we stopped before the noble Baroness, Lady Hayman, and I had had a chance to speak. That is what comes of stopping mid-flight, but here we go—if anybody can remember what we were doing an hour ago. Before I go on, I remind the House of my relevant interests, as a member of Kirklees Council and as a vice-president of the Local Government Association.

First, I speak to Amendment 15, which is in the name of the noble Baroness, Lady Hayman of Ullock, and to which I put my name. I raised a number of concerns at Second Reading and in Committee about the consequences of the part-privatisation of building control inspectors some 20-odd years ago, whereby developers can and do appoint their own building control inspectors. As noble Lords will know who have been here throughout all these stages, I have referred before to my favourite: “Quis custodiet ipsos custodes?” Who will call these folk to account? At the moment, nobody does, and the result is what we are trying to deal with today.

If we had a band of building control inspectors who were like terriers in pursuit of bad practice and cutting corners, we would not be here today trying to put things right. So this is absolutely key to what we are doing—and, of course, I support the creation of the building safety regulator, and all the other parts of the Bill that the Government have introduced, but I recognise that it affects only buildings of 18 metres and above. Dame Judith Hackitt brought to our attention in her report her grave concern about developers who can choose their own inspector. Two things need to be dealt with: they should no longer be able to do so, and we should not create a two-tier inspection system. This amendment tries to put those two things right, and I am sure that the Government will accept it. It is, dare I say it, common sense. Why would you have such a stringent regulatory system for 18 metres and above, which I totally support, and then say, “Oh well, for the others it’ll be okay.” It will not be okay, and it has not been, so let us put it right.

The amendment proposes that local authority building inspectors take on that role. I support that idea not because they are local authority, but because they are based in an area and are therefore attached to the council and know who the builders are in that area. They know the particular problems of building in the Pennines, for example, where there is not much ground before you hit solid stone, or of building in London clay, where the problems are different. If we have building control inspectors who recognise the different problems across the country, we are more likely to get regulations that are adhered to. This is an important amendment, and I hope that the Government will treat it in that light.

My noble friend has already introduced Amendment 264, which is also in my name. It is also fundamental to building safety, because unless you have a workforce imbued with the knowledge and experience of building in a safe way, we will have the current corrosive construction industry culture that we and the Minister have spoken about. This is one way, one route, one of the tools in the toolbox—another phrase he loves—to try and put that right. Both those amendments are key. I think the Minister will say: “Yeah, that was really good. Why did we not think of it?” But I am an optimist.

I am going to just mention the other amendments, in the names of my noble friends Lady Brinton, Lord Foster and Lady Jolly and others, because they raise important issues. Here are just two statistics. First, according to my noble friend Lord Foster, there were 355 fires in high-rise buildings last year, and over 50% had electrical causes. Why would we not try and put that right? Here is an amendment that does that. Secondly, regarding my noble friend Lady Jolly’s amendment, 700 lives are lost because of falls on stairs. Why would we not put that right? Why would we not? They are sensible. Let us do them—in the interests of co-operation and collaboration.

Finally, Amendment 261, in the name of my noble friend Lord Foster, is one he feels very strongly about and rightly so. I am just going to mention that, 15 years ago or a bit more, Kirklees Council, of which I was then leader, had a scheme we called the “warm zone scheme” that introduced free loft insulation and cavity wall insulation to all 200,000 houses in the borough, regardless of tenure. We just did it for the reasons that my noble friend Lord Foster brought to our attention—because people were dying of hypothermia. That is not acceptable. Why did we do it? We did it 15 years ago, and the benefits have shown: fewer deaths, warmer homes, lower bills. The challenge to the Minister is to take that cry to the Government and say, “Look, it has been done once: 200,000 homes were offered it, and nearly 100,000 homes in a cold part of West Yorkshire took it up, and it worked.” We are being constructive and positive. There is no denying the force of our argument. I look forward to the Minister’s response.

I must again thank those noble Lords who have participated in this interesting debate. It is a shame it has become a group of two halves, but I will address the points raised in turn.

Turning first to Amendment 15, I thank the noble Baronesses, Lady Hayman of Ullock and Lady Pinnock, for raising this important matter, but as they have surmised, I am afraid the Government will not be able to accept this amendment. The noble Baroness, Lady Pinnock, will know that local authorities are already the statutory provider of building control services to the public under the Building Act 1984. This includes the duty to enforce the Act in their jurisdiction and they retain ultimate responsibility with regard to enforcement action, except where the building safety regulator is the building control authority.

In response to the concerns of the noble Baroness, Lady Pinnock, I can say we are introducing a system of oversight, registration and regulation, driving up standards across both public and private sector building control. The Bill introduces a new professional framework for which individual registration will be based on competence, subject to a code of conduct and sanctions where standards fall short. Registered building control approvers and building control authorities will need to obtain and consider the advice of a registered building inspector before carrying out certain building control functions and use a registered building inspector to undertake certain activities. This greater scrutiny and accountability will provide greater incentive to ensure all buildings, including non-higher-risk buildings, are safe. Our approach is proportionate to risk.

The new regulatory regime set out in the Bill and draft secondary legislation is proportionate to the level of risk potentially found in high-rise residential and other in-scope buildings. The Government have chosen to set the scope of the new more stringent regime at 18 metres or seven storeys, as we are committed to following this risk-based approach. Evidence from Dame Judith Hackitt has shown that, in general, the risk from fire increases with height. Through the Bill, the Fire Safety Act and further fire reform, we are working to protect all residents in buildings, regardless of height. Given these points, I hope your Lordships will agree that this amendment is not required.

Turning to Amendment 254, on sale of goods online, I reassure noble Lords that the Government fully recognise the importance of ensuring product safety, not only in relation to fire risk but also for the wider prevention of harm. As I set out in Grand Committee, existing product safety legislation applies to all products, whether sold online or offline. However, the Government also recognise that the rapid growth of e-commerce, particularly of third-party sales via online marketplaces, presents a significant challenge.

While I sympathise with the intention of the amendment, it represents only a partial response to the wider issue of unsafe products sold online. This illustrates that the Bill is not the best means of addressing the issue. The ongoing product safety review, which is examining the full range of consumer products and the role of online sales, is the more appropriate vehicle for meeting the concerns of the noble Lord, Lord Foster. He mentioned the letter I wrote after Committee to electrical safety firms. As I said, we are planning a consultation on proposals for reform, which will be published not later this year, as previously stated, but later this spring. Once it is published, I will be happy to update the noble Lord and this House to ensure that concerns raised in this debate are fully reflected. I hope I have reassured the noble Lord.

Turning to Amendment 261, again I thank the noble Lord for raising this important matter and recognise his concerns about poor-quality homes. However, I am afraid that the Government will not be able to accept this amendment, as it pre-empts and duplicates work already being undertaken across government. As the noble Lord reminded the House, in 2017, the Government committed in The Clean Growth Strategy to improve as many homes as possible to EPC band C by 2035. Where practical, affordable and cost-effective, we are seeking to bring as many private rental homes as possible in line with EPC band C by 2030. The Government have now consulted on raising the energy performance standard in the domestic private rented sector to EPC band C and will be publishing our response in due course. I hope the noble Lord will take some comfort from this.

In the energy White Paper, we announced our intention to seek primary powers to create a long-term regulatory framework to improve the energy performance of homes, alongside a package of incentives. We have consulted with a wide range of stakeholders and will undertake further consultation on specific policy design before making secondary legislation. In the social housing White Paper, we pledged to review the statutory decent homes standard by 2024, to consider how it can better support decarbonisation and improve the energy efficiency of social homes.

We shall publish a White Paper in the spring to reform the private rented sector. Some £800 million was committed through the 2021 spending review for a social housing decarbonisation fund and, as further evidence of our intent, we also committed in the levelling up White Paper to explore proposals for new minimum standards in the social and private rented sectors. In the Net Zero Strategy, we reiterated our commitment to consulting on phasing in higher minimum performance standards to ensure all homes meet EPC band C by 2035 where practical, cost-effective and affordable. I can assure the noble Lord that the Government will deliver on all our commitments in this space, but I ask that he does not press this amendment.

Turning to Amendment 262, on staircase regulations, I thank the noble Baronesses for raising this important matter and other noble Lords for contributing to this debate, but I am afraid that the Government will not be able to accept this amendment.

As the noble Baroness, Lady Jolly, mentioned, my noble friend the Minister convened a meeting of the Building Regulations Advisory Committee on 16 March to seek its advice on this matter. I have the response from its chairman here. The Building Regulations Advisory Committee has advised that the Government should carry out a review of the statutory guidance, approved document K, focusing on section K1, which covers staircases. It also advised that it was more appropriate to deal with this issue through the building regulations and associated statutory guidance than in primary legislation. In his letter, Hywel Davies says that BRAC agrees that it is more appropriate to seek to address this problem through building regulations and associated statutory guidance than in primary legislation and recommends a focused review of ADK section 1. Further detail on the potential scope of the review of ADK is set out in annexe 1 of the letter.

The Government have accepted the advice of the Building Regulations Advisory Committee and will now put in motion a review of approved document K, focusing primarily on section K1. This review will run in parallel with the review already under way of approved document M, which looks at accessibility. This review will consult on raising the safety of staircases to that achieved by meeting the British Standard on staircases, BS 5395-1. I reassure noble Lords that this will be done as expeditiously as possible and certainly within the year. I assure the noble Baroness that this review will fully address her intention to consult on improving standards of staircase safety in England. I thank her for raising this important matter and assure her that it is being addressed by government.

Turning to Amendment 264, laid by the noble Baroness, Lady Pinnock, and the noble Lord, Lord Stunell, I thank noble Lords for raising this important matter. As I assured them in Grand Committee, their intentions have been met in the Bill. Clause 10 requires the building safety regulator to establish the industry competence committee, which will oversee and monitor industry’s development of competence frameworks and training, undertake analysis to understand areas for improvement, and work with industry to drive gap-filling. The committee will provide reports of its work to the regulator periodically. The Health and Safety Executive has established an interim industry competence committee, which is developing its plan for supporting industry’s work, including understanding the current competence landscape. Training and certification of competent individuals is not a function of government or the regulator under this Bill. The industry needs to lead the work to improve competence, identify skills and capacity gaps, and provide appropriate training for its members, and has already started this work. The Government continue to monitor industry’s progress and will provide support where necessary.

Clause 152 legislates for the appointment, at least once every five years, of an independent person to carry out a review of the system of regulation for building safety and standards and the system of regulation for construction products. Importantly, the reviewer is not limited and may choose to review connected matters, which could include the built environment industry workforce. When defining “independent”, we have excluded those with a clear conflict of interest, without overreaching and excluding everyone with relevant experience. Given this explanation, I trust that noble Lords will agree that Amendment 264 duplicates many of the existing provisions in the Bill. With those reassurances, I respectfully ask the noble Baroness to withdraw her amendment.

My Lords, I thank the Minister for her detailed response. I was very pleased to hear her response to the amendment on staircase safety from the noble Baroness, Lady Jolly. It is good that the Government are going to review this. I am sure noble Lords will keep the pressure on to make sure that that is done expeditiously.

Coming to my Amendment 15, again, I thank the Minister for her response. I am still concerned about the potential for a two-tier system and potential conflicts of interest, so I ask the Minister whether she could encourage the Government to monitor these issues once this becomes law to ensure that we do not end up with a system that does not work for all people. In the meantime, I beg leave to withdraw my amendment.

Amendment 15 withdrawn.

Amendment 16 not moved.

Clause 41: Regulation of building control profession

Amendment 17

Moved by

17: Clause 41, page 56, line 27, at end insert—

“Inspection of local authorities and registered building control approvers 58Z7A Inspections(1) The regulatory authority may carry out an inspection of a local authority, or a registered building control approver, in relation to their exercise of building control functions.(2) The purposes for which an inspection may be carried out include—(a) ascertaining the efficiency and effectiveness of the local authority or registered building control approver in exercising their building control functions;(b) verifying any information provided by the local authority or registered building control approver to the regulatory authority, in connection with their building control functions.”Member’s explanatory statement

This amendment confers a power on the regulatory authority to inspect local authorities and registered building control approvers, in relation to their building control functions.

My Lords, I open this group by introducing a number of technical amendments tabled to strengthen the Bill. Included within this group are amendments that simply update the drafting of the Bill. These include Amendments 72, 75, 79 and 274.

I will speak to government Amendments 17 to 19, which make changes to Clauses 41 and 47 and introduce a new clause relating to approved inspectors. Amendments 18 and 19 relate specifically to approved inspectors’ insurance, while Amendment 17 introduces a power for the regulatory authority to inspect local authorities and registered building control approvers. The Building Act 1984 currently requires approved inspectors to hold insurance through a government-approved scheme. These amendments remove this requirement. Instead, approved inspectors will need to identify adequate cover themselves, encouraging competition between insurance providers.

The Bill will give the new building safety regulator powers to set insurance requirements for approved inspectors—or registered building control approvers—via professional conduct rules, should it choose to do so. In line with other professions, approved inspectors will be required to make judgments on how best to cover their liabilities. Your Lordships will already be aware that the Bill provides the building safety regulator with the powers to sanction any approved inspector or registered building control approver who fails to meet standards set out by the professional conduct rules, which may include requirements on insurance. The measures which I am introducing will help ensure that the approved inspector sector’s liabilities continue to be adequately covered.

The amendments made to the special measures provisions are minor and technical in nature. They replace references to “relevant person” with “accountable person”, consequential to the removal of the BSM role, and provide more detail on when a contract is a “relevant contract”.

Government Amendments 238 to 242 make changes to Clause 139 to clarify the definitions of “new-build home” and “developer”. They make sure that extensions to residential buildings to create new homes would also fall under the new homes ombudsman’s remit; for example, where a new floor is added to an existing residential building to create new flats. They also make it clear that the ombudsman’s remit covers works which create new homes within an existing residential building, rather than only changes to buildings previously used for other purposes.

Finally, government Amendments 243, 244 and 265 address concerns raised in Committee on new-build warranties. I thank the noble Lords, Lord Best and Lord Kennedy—the latter is not in his place—for raising important concerns regarding inadequate new-build warranties and making the case for all new-build warranties to satisfy proper standards. We have also been in discussion for some time with warranty providers, developers and financial regulators on this issue and, in the absence of a proposal from the market, the Government have concluded that intervention is necessary.

I am therefore pleased to introduce amendments to mandate in law that a developer must provide a warranty to a purchaser of a new home. The minimum length of warranties on new-build homes is set at 15 years, in line with the prospective limitation period for action under the Defective Premises Act 1972, and we are taking a power to set out in regulations the minimum level of coverage provided by those warranties.

Amendment 243 also includes powers to set the period during which the developer itself remains responsible for fixing defects, aiming to keep those who caused the problem on the hook for longer. We will propose regulations setting out, for the first time, minimum levels of warranty coverage and standards of service to be provided, as well as setting out in law that the benefit of the policy would be transferable when a property is sold within the policy term.

Finally, this amendment will also provide for a further power to make regulations imposing a financial penalty of up to £10,000 or 10% of the sale value, whichever is greater, on any developer which fails to meet these new requirements without a reasonable excuse.

Together, these amendments will better support home owners, giving them greater protection and peace of mind when purchasing new-build homes and improving redress for when things go wrong. I beg to move.

My Lords, I have a couple of points that would perhaps have been better taken in Committee, but we did not have the amendments then, so I apologise for these rather Committee-related points. I refer to the government Amendments 18 and 19 about insurance requirements, which I am afraid are not very self-explanatory and, in the absence of explanatory text, rather impenetrable.

Amendment 18 rather boldly says, “Leave out Clause 47”. Clause 47 is one that requires there to be an insurance scheme for certain officials, as the Minister has just set out. That is in a context where, in Amendment 243, the Government have found the need to step in to provide a warranty scheme and make sure it really happens. In the building industry, many of those looking for professional indemnity insurance have found that in the first year after Grenfell their premiums went up by a factor of two, and in the most recent year their premiums have gone up by a factor of four.

Insurers are fleeing the market of providing professional indemnity insurance for anybody who has anything to do with the construction industry. So I wondered whether there was any evidence available, to the Minister or the department, that there was a functioning market in insurance products for those for whom this requirement is being changed. It was, as the Minister has just said, up to professionals in this new profession to seek out insurance, just as it was for professionals such as architects, surveyors or whoever it might be. In a situation where that insurance market is shrinking, and where the Government have found it necessary to talk about imposing a requirement in relation to housing warranties, how happy are they that such a market really exists, and that the abolition of Clause 47’s requirements actually make sense?

I am not proposing an amendment. I am simply seeking to establish that the Government do know exactly what they are doing, and also asking them to explain to this House and noble Lords what exactly they are intending to do.

My Lords, I welcome these technical amendments, tabled by the Minister. While I will not unnecessarily detain the House by discussing each amendment, I would appreciate clarification on a small number of issues.

First, Amendment 17 provides the building safety regulator with a power to conduct inspections of building control bodies, thereby giving further oversight of building control bodies provision. Can the Minister explain what guidance will be given on the conduct of such inspections?

Secondly, Amendments 243, 244 and 265 will together mandate a warranty of 15 years minimum as a standard, while enabling the making of regulations for warranties to set a minimum period of liability for developers, minimum standards for the warranty, and a penalty regime for any developers failing to comply. On the warranty, can the Minister explain the rationale for 15 years? Can she elaborate on the Government’s plans for the penalty regime?

As I stated earlier, I welcome these technical amendments and look forward to clarification from the Minister.

My Lords, I thank noble Lords for this short debate on these amendments. I am very pleased that most of them, if not all of them, have been welcomed, because I think they will make a difference to the housing market.

The noble Lord, Lord Stunell, brought up the issue of why the amendments have come so late. It is because we listened; the Minister listened, in Committee, to this issue, and therefore the Government have brought forward these amendments. I think the important thing about insurance requirements, as I said, is that the Government are expecting this to reinvigorate the insurance market. At the moment, that is not the case because it is all done through specific Government-procured insurance. This should reinvigorate the market that, as he quite rightly says, is not as vigorous as it should be at the moment. So that is one thing.

The insurance of approved inspectors was mentioned. It will be for the building safety regulator to decide how to set up insurance requirements for approved inspectors. This can be done by the regulator through its professional conduct rules.

The noble Lord, Lord Khan, asked who has oversight of this. It will be the building safety regulator. That is their job, and it is through their rules and regulations that they will make sure that these things are delivered.

Lastly, I am afraid I do not know how the 15 years came about, but I will find an answer for the noble Lord. It is in line with the prospective limitation period for action under the Defective Premises Act 1972—but I will find out how that came about in 1972 for the noble Lord.

Amendment 17 agreed.

Clause 47: Insurance

Amendment 18

Moved by

18: Clause 47, leave out Clause 47

Member’s explanatory statement

This amendment removes provision about insurance cover relating to work to which an initial notice relates.

Amendment 18 agreed.

Amendment 19

Moved by

19: After Clause 47, insert the following new Clause—

“Insurance: removal of requirements

(1) The Building Act 1984 is amended as follows.(2) In section 47 (giving and acceptance of initial notice)—(a) in subsection (1) omit paragraph (c) (but not the “and” at the end of it);(b) omit subsections (6) and (7).(3) In section 51A(2) (variation of work to which initial notice relates) omit paragraph (c) (but not the “and” at the end of it).(4) In section 56 (recording and furnishing of information) omit subsection (2).”Member’s explanatory statement

This new Clause removes requirements in Part 2 of the Building Act 1984 relating to insurance.

Amendment 19 agreed.

Schedule 5: Minor and consequential amendments in connection with Part 3

Amendment 20 not moved.

Clause 57: Levy on applications for building control approval etc

Amendment 21

Moved by

21: Clause 57, page 80, line 8, at end insert—

“(3A) The different provision that may be made by the regulations by virtue of section 120A(2)(b) includes in particular different provision in relation to—(a) persons who are eligible to be members of a building industry scheme and are not members of that scheme, and(b) other persons.”Member’s explanatory statement

This amendment clarifies that regulations under this Clause may make different provision in relation to persons who are eligible, but not members, of a scheme established under Clause 128 and other persons.

My Lords, I am very pleased to speak to a group of amendments that will strengthen our solution in law to ensure that the industry pays to remediate all unsafe high-rise and medium-rise buildings for which it is responsible, and contributes to fund the remediation of all cladding on 11-metre to 18-metre buildings. As discussed during our debate in Committee, we need to take action against those unwilling to make these commitments and impose a solution in law to make sure that developers and manufacturers take responsibility for rectifying building safety defects—the polluter must pay.

Amendments 133 to 136 set out a number of changes to the definition of associated persons within the leaseholder protections provisions. Amendment 137 sets out that partnerships are captured within the definition of an associated company and Amendment 139 defines joint ventures. This will ensure that well-resourced companies cannot make use of complex corporate structures to evade their responsibilities. These amendments pierce the corporate veil.

Amendment 179 confers a power to make regulations to require landlords to provide information to a relevant tenant or other prescribed person

I will now speak to amendments we are making to Clauses 128 and 129, which I moved in Committee. As noble Lords may remember, these clauses give the Government the power to establish building industry schemes. We want to use this power to enable us to establish a scheme to distinguish between building industry actors who have committed to act responsibly and make buildings safe, and irresponsible actors who have failed to do so. The amendments tabled on 22 March add detail to those powers, to reflect more clearly the Government’s intentions and to provide Parliament and the public with more information on the purpose of any building industry scheme or schemes we set up, together with indicative examples of the kinds of membership conditions that eligible industry actors may need to meet to be part of a scheme.

We have made it clear that we expect the industry to act now to take responsibility for fixing building safety defects, and our principal objective in establishing a scheme under this power would be to make sure that we can hold industry to account against this and other obligations. Examples of the kinds of membership conditions that may apply to members of a scheme in connection with these purposes include: the remedying of defects in buildings to which an industry actor has a connection; and making financial contributions towards remediation of defects in buildings, including by way of contribution to a general industry fund to pay for remediation.

We may also require scheme members not to use certain construction products made by prescribed manufacturers—for example, cladding and insulation products made by manufacturers who have failed to step up and commit to an industry solution by making a financial contribution to remediating unsafe buildings.

We have also made amendments to Clauses 57, 130 and 131 to clarify the relationship between the building industry scheme clause and other Bill measures. Those amendments link membership of a scheme with the powers to impose different rates of the building safety levy, to block prescribed developers commencing development for which planning permission has been granted and to block prescribed developers being able to obtain building control approval on developments. An entity which is eligible to be a member of a scheme but elects not to join it by making the necessary commitments to be a member may be subject to these measures. We have also specified that any regulations laid for these powers are to be affirmative, requiring parliamentary approval for the design of any schemes.

We hope that using these powers will not be necessary. We expect the building industry to do the right thing and step up to contribute to fixing the building safety crisis. However, if the industry fails to do the right thing to make buildings safe, we will use these powers to make sure that only responsible companies continue to benefit from government support.

Amendments 181 to 185 make changes to remediation orders. First, we are broadening the persons who can apply to the first-tier Tribunal for a remediation order to include a person with a legal or equitable interest in the relevant building or any part of it. This means that, for example, a leaseholder will be able to apply to the tribunal to require their landlord to undertake remediation work if they are not doing so. Secondly, we are clarifying that a remediation order may be made against a person who has a repairing obligation for part of a relevant building, even if they would not otherwise be classed as a relevant landlord, to allow a remediation order to be made against, for example, a managing agent. Finally, we are providing that remediation orders are enforceable by the county court.

Amendments 186 to 193 seek to improve the current provisions on remediation contribution orders. First, we are broadening the companies which can have a remediation contribution order made against them to include developers and previous landlords through Amendment 188. This will provide a potentially easier route to secure funding for remediation than through civil action, such as under the Defective Premises Act. The definition of developer is given by Amendment 189.

Following our debate in Grand Committee, we are also proposing to broaden the types of corporate body that can have an order made against them to include partnerships and limited partnerships through Amendments 186, 187 and 192. Partnership is defined as including partnerships and limited partnerships by Amendment 137 to Clause 123. The issue of limited liability partnerships under the Limited Liability Partnerships Act 2000 was also raised in Grand Committee. I am advised that such partnerships are already included in the definition of body corporate in Clause 123, so no amendment is required to bring such bodies into these provisions.

Amendments 190 and 191 extend who can apply for a remediation contribution order to include the Secretary of State and any other person prescribed through secondary legislation. This is to provide flexibility in case it becomes apparent there are further groups which should be granted the ability to apply for a remediation contribution order. Lastly, Amendment 193 provides a power to deal with self-contained buildings that are part of a wider structure.

I hope your Lordships agree that remediation contribution orders, with the changes the Government propose, are an important part of the wider leaseholder protection package and that supporting these amendments will ensure we get them right.

I now turn to Amendments 194 to 199 which make changes to the operation of Clause 127 on meeting remediation costs of insolvent landlords. Amendment 194 provides that a person acting as an insolvency practitioner in relation to the company may apply for an order under the clause. This ensures that a wider range of insolvency procedures, such as company voluntary arrangements, are in scope of this clause. Amendment 197 sets out that “insolvency practitioner” has the same meaning as in the Insolvency Act 1986. Amendment 196 makes clear that contributions made by an associated company under the clause are to be used for the purpose of meeting costs associated with relevant defects. Amendments 195 and 198 set out that an order under the clause may be made against a partnership associated with the company that is being wound up.

Amendments 227 and 228 seek to improve the clauses on building liability orders. Amendment 228 would add a new clause to the Bill to support potential claimants in understanding which companies are associated, mitigating against corporate groups employing ever-more opaque and complex structures, which claimants will struggle to unravel.

We are also altering the territorial application of Clauses 132 and 133 to include Wales as well as England. This has been agreed with the Welsh Government and aligns with the territorial extent of the Defective Premises Act and Section 38 of the Building Act.

In response to the remarks of the noble Lord, Lord Stunell, during Grand Committee, I confirm that we consider that the provisions on building liability orders are compatible with human rights legislation. We expect the High Court to consider a variety of factors when deciding whether to grant a building liability order, including the extent of the damages being sought and whether a fair trial can take place. We are considering whether we need to do any further work on this, such as producing guidance with the Judicial College.

The Government consider that building liability orders will be an important tool in holding to account wrongdoers—or polluters or perpetrators, if noble Lords prefer; whether we say “polluter pays” or “perpetrator pays” is their choice. We must hold them to account. I hope your Lordships will join me in supporting these amendments.

Finally, I will briefly mention Amendments 140, 176, 178 and 230, each of which makes a minor drafting change. I know that noble Lords agree that it is unfair that innocent leaseholders have had to pay thus far, and it is now time for the industry to step up, take responsibility and rectify their mistakes.

I ask your Lordships to support this significant and important set of amendments to ensure that the polluter pays.

My Lords, I welcome the amendments tabled by the Government. As my noble friend has explained, they extend the scope of liability, making it more likely that builders will be remediated. The amendments also block some loopholes, and I welcome that.

I begin with a general point about amending this part of the Bill. I understand the caution that many in your Lordships’ House have about amending a Bill at this stage of a Parliament if it has been fully scrutinised by the Commons. However, there should be no such inhibitions about amending this part of the Bill, because although the Bill started in another place, the remediation clauses were added in your Lordships’ House, and the other place has never considered them. So, as part of our role we should feel free to amend the Bill if we feel that that is the right thing to do, not least because the Government have themselves tabled several hundred amendments.

I make it clear that I welcome the amendments on remediation, and I commend my noble friend and Michael Gove on the substantial progress that they have made in beginning to address the crisis facing thousands of leaseholders trapped in unsaleable flats, facing unaffordable remediation bills and repossession as well as, in many cases, high insurance premiums and the costs of waking watches, while continuing to live in a building which is a fire risk.

My noble friend has moved the dial, and is to be commended for that, but, as today’s debate will show, the Bill as it stands falls well short of assurances that Ministers have given to leaseholders, who are the only innocent party in a scandal that has involved developers, contractors, local authorities and, indeed, as is emerging from the Grenfell inquiry, the Government, who knew about the cladding problems 15 years before Grenfell—and did nothing.

In this section of the Bill we are building on the Government’s proposals and we do so after extensive discussions with Ministers and officials, for which we are really grateful. We hope that it may still be possible, even at this late stage, to find common ground.

In particular, we seek to amend the Bill to be consistent with commitments that Ministers have made on the record. I remind my noble friend the Minister of what he told noble Lords in his letter dated 20 January, entitled “Introduction of the Building Safety Bill”. He said:

“The Secretary of State recently announced that leaseholders living in their homes should be protected from the costs of remediating historic building safety defects.”

That letter built on the Statement made by the Secretary of State, Michael Gove, on 10 January in another place. He said:

“First, we will make sure that we provide leaseholders with statutory protection … and we will work with colleagues across the House to ensure that that statutory protection extends to all the work”—

all the work—

“required to make buildings safe.”

The Statement said:

“We will take action to end the scandal and protect leaseholders.”

It continued:

“We will make industry pay to fix all of the remaining problems and help to cover the range of costs facing leaseholders.”—[Official Report, Commons, 10/1/22; cols. 285-291.]

I think we would all agree with that.

However, since then these commitments have been watered down. Not all leaseholders are covered by the Bill, not all buildings are covered by the Bill, and defects have been sub-divided into those that are fully protected by qualifying leaseholders, and other defects that are not. I see no guiding principle behind these distinctions, but the consequence is protecting the contractor/taxpayer and putting more costs on to the only innocent party: the leaseholder.

Turning to Amendment 233, in my name and that of my noble friend Lord Blencathra, I appreciate that there are other proposals that have the same objective as ours, namely Amendments 221 and 234. I am in no way prescriptive about how the problem is tackled. The best way forward may be for my noble friend the Minister to say that he recognises the problem and will come up with the same solution at a later stage, so let me describe the problem.

The Government’s so-called waterfall proposal creates a pyramid of contributions, with developers at the top and leaseholders at the bottom. This is a welcome inversion of the situation under the current law, where the leaseholders are in the firing line, and the Government should be commended for it, but the waterfall does not live up to Michael Gove’s Statement, in which he said that

“leaseholders are shouldering a desperately unfair burden. They are blameless, and it is morally wrong that they should be the ones asked to pay the price. I am clear about who should pay the price for remedying failures. It should be the industries that profited, as they caused the problem, and those who have continued to profit, as they make it worse.”—[Official Report, Commons, 10/1/22; cols. 283-84.]

We have been told at meetings with officials and Ministers that good progress has been made in persuading the industry to accept its responsibility and remediate the buildings for which it is responsible, doubtless incentivised by some of the provisions in the Bill. I commend Ministers for the progress they have made. However, we are left with the issue of what happens to buildings where remediation does not happen—the so-called orphaned buildings. The freeholder has no resources, there is no developer or contractor to sue, and so we reach the end of the waterfall: the leaseholders. What are they supposed to do? Are they supposed to pay for all the non-cladding costs, which they cannot afford? In many cases these are higher than the cladding costs. Should they continue to live in a dangerous building, with properties that they cannot sell and with high insurance premiums?

Let me illustrate this with an example, Northpoint in Bromley. The developer, Taylor Wimpey, a company listed on the FTSE 100, refuses to pay, I am told. The building is already in the building safety fund for cladding, so taxpayers are picking up the bill. Under the waterfall, we come to the resident management company, which is run by the leaseholders. It collects the service charge and therefore has a liability in step 2 of the Government’s waterfall, but it has no assets and does not have an interest worth £2 million, so we reach the end of the waterfall: the leaseholders. Most flats in Northpoint are worth less than £325,000, so there will be zero commitment to be collected from most leaseholders for non-cladding costs, thanks to the Government’s low-value exemption. A handful of the flats in that building are worth more than £325,000, so those few leaseholders are in the invidious position of having to pay £15,000—but they do not have to pay, because waking watches have eaten up their £15,000 caps already, so they pay nothing.

At Northpoint, the non-cladding works are not covered by the building safety fund, so who will pay? The only option for the moment is to ask the leaseholders to pay, wearing their hats as shareholders in the resident management company, but that defeats the point of the caps the Government have proposed for leaseholders. There are many other examples of no liability on someone with assets to pay—the so-called orphaned buildings. It is unacceptable that dangerous buildings, part of this country’s housing stock, should remain in this condition either indefinitely or until prolonged litigation has been completed.

The amendment creates a remediator of last resort. It requires that local authorities compile a list of all relevant buildings in their area within three months. If the landlords of those buildings have not started to remediate them three months after the list is completed, then the provision is activated. The amendment allows the Secretary of State to step in to undertake the work if the local authority does not want to or is not able to. I have to say that I have been a little disappointed by the response of the LGA and the GLA to my proposal. The local authority or Secretary of State could pursue the responsible developer, if there is one, with debt claims to recover the money laid out on remedial works. If the local authority chose to do the work, the amendment provides that it should be reimbursed by the Secretary of State.

This ensures that there is a fail-safe mechanism in law. The Government’s legislative proposals do not tell us what will happen if remedial works are simply not started or cannot be completed as a result of the effect of the caps and the restrictions on buy-to-let landlords. This duty would fill that gap. Where this amendment differs from other approaches is that they require the money to be provided upfront before work can commence, through funds that do not exist at the moment and which will not have money in them for some time to come. This amendment provides bridging finance from the Government.

I do not think we can simply sit and wait. If the Government cannot accept this amendment, they must come up with an alternative proposal that ticks the box. Without such an assurance, this Bill simply will not live up to its name.

My Lords, as it is my first contribution in this part of the Bill, I must necessarily declare my interests as a practising chartered surveyor, a member of the RICS and a patron of the Charted Association of Building Engineers. I am also a member of the Built Environment Select Committee, chaired by the doughty noble Baroness, Lady Neville-Rolfe, who keeps us all in order. I think she is splendid and I do not say that for want of any favours. I also own residential rented property: no flats, no high-rise, thank goodness.

I pay tribute to the Minister for the meetings he has arranged, the dialogue in which he has been willing to engage and his untiring efforts and those of his Bill team. It is fair to say that we have come an enormous way in this Bill and that is in large part, if not solely, because of the drive the Minister has put into this. I am pleased that he has clarified the limited partnerships and provided the other clarifications in the amendments he has introduced. I also pay tribute to all noble Lords around the House who have stuck with the principle that the innocent should not be made to pay for the mistakes of the developers and constructors.

I will just deal, if I may, with Amendments 201 and 202, which are in my name and on which I will not be seeking the opinion of the House. They relate to a matter I referred to in Committee, which is insolvent landlords and their interests being escheated to the Crown. That means that potentially, there is no landlord as such to organise remediation work, leaving remediation in limbo and responsibility for costs uncertain. That follows on from what the noble Lord, Lord Young of Cookham, set out with, I may say, a degree of piercing clarity which I found unchallengeable. I will outline the differences between my further amendments and his, but not on these ones.

The sole purpose of my Amendment 201 is to clarify the Crown responsibility. Amendment 202 covers where a superior leaseholder defaults and as a result the liability potentially passes to others. This amendment would serve to prevent a lease being disclaimed, thereby creating another loophole and another piece of loose liability floating around the system.

Amendment 229 in my name is another probing amendment; I hope it is self-explanatory. It attempts to deal with a perceived problem of delay by landlords and agents in accepting first funding agreements for remediation. The matter was highlighted in a recent edition of Inside Housing. Reference was made to the logjam created because managing agents were reluctant to sign off on remediation contracts without knowing who would be paying for the work or, indeed, when. That effectively stalled the first funding offer acceptance.

It was thought that the matter had been resolved; according to the Inside Housing article, the Minister confirmed in December that the logjam had been cleared. Notwithstanding this, the article said, the problems persist. It reported cases in St Albans, London and Manchester; in other words, all over the country. It is known that there are few enough contractors ready and willing to take on the—quite demanding in some cases—work of remediation, which this Bill addresses. Delay will simply cause contractors to go elsewhere and opportunities to be lost. This prejudices both leaseholder and, ultimately, I suspect, freeholder. It makes no sense. There may be many reasons for this—usually, I suspect, surrounding the landlord’s own tactical and financial advantage—but none can justify the excessive delay that this amendment seeks to avoid.

There seems to be a bit of a blame game going on between the department on the one hand and block management interests on the other. I am reluctant to take sides on that. This amendment intends to treat the symptoms by setting a time limit on acceptance of the offer so that things cannot be spun out. I hope that it will have the effect of concentrating minds and will be conducive to good order for that reason.

I now turn to Amendments 234 to 237 in my name. I make it clear that, subject to what I may hear from the Minister, I may need to test the opinion of the House on these amendments. They would have a similar effect to Amendment 233 in the name of the noble Lord, Lord Young; namely, to relieve leaseholders and freeholders of what many of us feel is an unjust imposition. Much of what we have been discussing arises because the Government believe, as I do, that, given the 30 years during which certain bad practices have taken root in construction quality, not every defect will have an identifiable perpetrator or associate currently in existence, solvent and with sufficient assets to make a claim a practical possibility. The Government seek to ensure that, if a construction defect exists which does not fall within their scheme of financial support for remediation and there is no perpetrator to be found, the public interest that buildings are made safe will persist. In their view, the only other possible sources of remediation funding are the freeholders and leaseholders.

I think it is fair to say that the noble Lords, Lord Young and Lord Blencathra, and I have been in a sort of huddle since Grand Committee. We all believe that the fallback should be the perpetrator of the situation. The amendment in the name of the noble Lord, Lord Young, proposes falling back on the local authority or the Secretary of State—AKA the taxpayer. I am aware that the Treasury has said, in fairly blunt terms, “We have made an allocation of £5.1 billion and that is it.” That means no more money unless it comes out of the departmental budget, impinging on other important work that the department might wish to take place. I take it that this is one reason, among many, why the Secretary of State has taken the initiative to protect the departmental budget by seeking voluntary contributions from the construction industry for a further £4 billion for other defects—good on the Secretary of State for doing that.

The first question I have for the Minister is: can he update us on how things are progressing on that voluntary scheme? Certainly, the industry’s initial response was not very fulsome, and the Secretary of State made what one might describe as a somewhat sterner demand— and very rightly too. The Minister’s answer is pivotal to how likely it is that property owners will have to fork out for these defects and thus require the protections he seeks to build into this Bill.

If the perpetrator, as defined, cannot be found, then it becomes a test of what is “just and equitable”—to use the words in the Bill—in apportioning the orphaned responsibility and cost between two groups of property owners, who, in the main, are likely to be completely innocent of the construction-related defects and for whom arguably it is neither just nor equitable that they should bear that responsibility and cost at all. Of course, that circumvents what I understand to be meant by the perpetrator pays principle, and results in the passing back of both responsibility and cost—the two are not exactly the same—to the innocent.

Given the Government’s insistence on this approach, I conclude that the deficit between what can be claimed from extant, solvent and legally liable developers on the one hand, and the true remediation cost on the other, is likely to be significant; otherwise, why would we be here? Meanwhile, I sense the industry is telling us, in the blunt cant of the trade, that we can whistle for it.

The Government’s remediation model of liabilities, exemptions, cost controls, means testing, tiered contributions by property value, appeals to courts and much chasing of tails withal is certainly not straight-forward. Any one of the procedural steps is contestable to some degree and contested they will undoubtedly be. So, while the many leaseholder protections are welcome, such as cladding on buildings over 11 metres, building safety levy backstops on cladding costs, exemptions for sub-£175,000—or £325,000 in London—properties, and non-cladding remediation where the landlord is or was connected to developer.

These are very welcome, but the model is incomplete and there remain significant exclusions. Properties under 11 metres are certainly one of them, but we will have to wait until we get to Amendment 115 in a later group to discuss that. There is also the question of buy-to-let landlords with more than three properties, but we will have to wait until we get to Amendment 123 to consider that. There is no backstop for non-cladding remediation costs. Leaseholders in enfranchised or commonhold blocks, as discussed in Amendment 117, may get some support for cladding remediation from the building safety fund, but I question whether they will get everything they are due under a true perpetrator pays principle.

Some issues have not necessarily been eliminated, despite what the Government claim. The noble Lord, Lord Young, referred to the waterfall, so I can skip my explanation as he has explained it much better than I would. Establishing cost liability does not of itself generate funds for remediation if those liable to pay are broke. It is a very important principle, because if the guys made responsible have no assets or cannot get at their assets because they are mortgaged up to the hilt and there is no equity, then what is the purpose of placing this onus on them in the first place?

The Government are taking a substantial risk in leaving it to the courts to decide whether it would be “just and equitable” as regards their various proposed orders. That seems to be tantamount to an invitation for further litigation, delay, uncertainty, risks, and so on. There will be applications for remediation orders, remediation cost orders, building liability orders, and litigation under the Defective Premises Act—my mind freezes over when I see that list.

There is no bridging funding facility in any of this, so unless the Secretary of State steps in or some other funding is levered in, remediation cannot take place. People cannot simply buy in on spec some large amount of a contractor’s time and substance; it is just not going to happen. Some of those who might, I suppose, be in line to be contributors to this just and equitable approach to splitting it between innocent parties—and I am sorry to go on about that—are not going to be there. Some buy-to-let investors will be denied any protections, and some landlords will fail the cost contribution test; I tried to make that clear when we were dealing with this in Committee. If you multiply the number of properties that they hold by £2 million per property, you will very often find that the total figure is greater than their capitalised worth—ergo, they drop out of responsibility.

A landlord—bless ’em—cannot, at risk perhaps even of insolvency, proceed to take legal action against third parties willy-nilly; that is not going to happen. If the developer is not in existence any more, and the landlord is in a similar, not particularly flush position, what funds will they have to underwrite the risks of pursuing other options? I do not think that it will bring certainty to the mortgage market or necessarily improve insurance risk in the short term. The real point is that it is just basically unjust. A substantial part of the costs will fall on innocent parties, with no connection to the developer; blameless buy-to-let landlords will be hit simply because they happen to own several properties. That looks a bit more like someone looking for a deep pocket, wherever they might find it, than the just deserts of those who gave rise to these problems in the first place.

The waterfall is incomplete—and if anybody wishes to cast doubt on what I am saying, they should not just listen to me but look at the analysis by Liam Spender of the Leasehold Knowledge Partnership, who produced a wonderful chart setting this out. I have a copy somewhere here—it used up most of the coloured ink in my printer, but never mind that. Then there are also the comments of the Mayor of London and the scores of emails that I have received, begging me to get this fixed.

The Government suggested that my earlier “perpetrator pays” approach would produce precisely the undesirable outcomes that independent commentators now say beset the Government’s own proposals. However, there has been a bit of a misunderstanding here. Landlords are already required by the department to undertake building-by-building assessments to ensure resident safety for the purposes of building safety fund applications. If a relevant and material construction fault has not been established by technical examination, clearly there is no claim that you can make, and no liability arises.

When I am told that my proposals would require a building-by-building assessment, I say yes, but how do you propose to establish any liability or any causation unless you get in and make an inspection? It just does not happen. I have not spent all these decades as a chartered surveyor without understanding that principle. It may be that the cost of the initial inspection to find out what is the problem is large, and that might be something that leaseholders and freeholders have to bear—but, I say again, if developers cannot verify that the work was correctly done, I do not see that that gets them off the hook. That must be part of what they should be responsible for paying. In effect, they have implicitly warranted that a building has complied. It is an industry that has given rise to the problem.

My Amendments 234 to 237 aim to address this issue. Effectively, they would require a Secretary of State to set up a fund financed from a wide industry levy, leaving the Secretary of State free to make the necessary regulatory arrangements for which powers in the Bill already exist. The basic premise is that the Government set up a building safety cost panel, funded out of an industry levy, to address the funding shortfall that I have referred to.

Amendment 234 sets in place provision for a building safety cost order made by a panel. The only trigger required is that the application to the panel must be made by an interested person, as defined. It covers the effects of the building safety cost order and guides the regulations to be made as to the form of order, service, enforcement, appeals, interim payments and so on. It is essentially facilitative, and it is for Secretary of State by regulation to decide the detail.

The definition of “relevant building” is deliberately wider than that in Clause 120 of the Bill, in including all buildings and not just those over 11 metres. This is because bad construction does not recognise height limits. The dreadful effects on those living in buildings with defects are not made any better by being nearer to the ground.

Amendment 235 sets up the membership of the building safety cost panel. It does not require this to be a government body or that money has to be channelled through government. Provisionally, I envisage that membership might include a fire-risk assessor or fire engineer, a building-control specialist and an actuary. The amendment sets in place certain administrative details relating to the functions, powers and obligations towards the panel, with default offences for non-co-operation.

Amendment 236 covers liabilities and how the panel is to determine those, including whether the fund should meet the remediation cost, as opposed to some other person or body. Proposed new subsection (4) covers situations where there is a form of warranty in the leases granted by the developer—namely, that there was compliance with the statutory standards. I believe that Royal Artillery Quays is one area where such clauses exist in leases. That would be a matter for this body to deal with.

Amendment 237 sets up the building safety cost fund itself, secured by a levy on the industry. Again, this is not prescriptive as to the detail and it does not say precisely how the levy shall be imposed. There are all sorts of possibilities. It might be, as the Mayor of London suggests, a development charge, or it might be a charge—ha!—on all those consented but long unbuilt residential plots that we keep hearing about. Would that not be a good thing? It might be a larger-developer turnover levy, or a specific charge on those whose poor standards have already been shown to have caused loss, in addition to direct remediation responsibility where proven. I happen to think that putting this on the statute book might be an encouragement for the industry to take greater voluntary steps pursuant to the exhortation from the Secretary of State. In other words, it is putting the Secretary of State’s voluntary scheme into a mandatory form.

I am advised on good authority of parliamentary counsel that there is nothing about this approach that is inconsistent with the other powers of the Secretary of State proposed in the Bill. Together these would procure some material changes.

First, they would pass the otherwise unattached responsibility for meeting remediation cost in those cases where a perpetrator or an associate no longer exists to the industry whose practices gave rise to the problem. Secondly, they would provide delivery on protecting innocent owners from unfair impositions, promised by the Government and demanded by all noble Lords in debates on previous stages of the Bill. Thirdly, they would set in place a clear line of funding without taxpayer burdens. Fourthly, they would not encounter the complex exclusions, conditionality and potential for cost and delay of the Government’s own waterfall approach, and could be designed to make early and substantial contributions towards remediation costs. Finally, they would be an ongoing reminder that bad commercial practices in construction will be called out by government and Parliament, thus providing a disincentive to further perpetuation of careless practice and passing the devastating outcomes on to wider society for the future.

It is necessary for me to invite the Minister to explain why the Bill provides for the innocent to bear the responsibilities properly attributable to the developer and the construction sector, and more particularly, why putting that onus back onto the industry is unjust, unacceptable or wrong in policy terms.

My Lords, there are 70 amendments in this group, but, on a positive note, they are all seeking to protect leaseholders. We have been very fortunate in having such a clear exposition of the issues which remain from the noble Lord, Lord Young of Cookham, who has demonstrated that there is still a gap in what the Government have set out. Who pays when there is literally no one left to pay? This relates to the orphan buildings, as the noble Lord has described them. That must be resolved. The noble Earl, Lord Lytton, has just shared his expertise on the matter. I admit that I have not quite understood every part of what he said, except that I know that it is based on knowledge and experience. I am very grateful to him for sharing it with the rest of the House and trying to find solutions to the problems which remain.

I have my name on four amendments. I will speak particularly to two of these which are, in a rather more straightforward way, seeking to achieve the same ends. Amendment 200, in my name and that of my noble friend Lord Stunell, presents another way by which leaseholders will be protected from any payment which results from the approach which the Government are taking—and which we will discuss in group 7—regarding who pays and how much leaseholders should be expected to pay. It also helps to solve the problem outlined particularly by the noble Lord, Lord Young of Cookham, about what happens to these orphan buildings when the waterfall runs out of people to fall on. I have suggested in Amendment 200 that we establish a leaseholder protection fund. I do so because, as noble Lords across the House know, there is an absolute determination on the part of all noble Lords who have spoken so far that, whatever else happens, the leaseholders will not, and should not, be the ones who pick up the bill for the errors of others—errors which are sometimes deliberate.

Amendment 200 takes a slice of the building safety fund which the developers are providing, and it establishes a fund for leaseholders who are left carrying the can, either through the orphan building situation—as described by the two previous speakers—or if the cap which we will discuss in group 7 remains. In both cases, it achieves the same end: there is a fund to which leaseholders can apply for funding to offset the bills they are presented with for work for which they have no responsibility and should never be asked to pay. This is the aim of Amendment 200, and I hope that one of the other amendments deals with this because, as far as I am concerned, this is a backstop. I assume that one of the other amendments will get the majority support of your Lordships’ House, and I will therefore not press this particular amendment.

Amendment 221, in my name and that of my noble friend Lord Stunell, captures our concerns that, despite the best endeavours of the Government—I recognise and welcome the considerable, positive change in their approach—there is a problem that needs to be addressed. The noble Lord, Lord Young of Cookham, has explained what may happen. We have already read in the mainstream press but also in publications to do with housing such as Inside Housing that developers are already turning to law to challenge the Government’s approach. The amendment would take as a starting point the dateline of 24 February—when the Government changed their course and became much more positive and constructive in trying to prevent leaseholders paying—and give developers, constructors, material manufacturers and all those involved in this mess five years, and say to them, “You’ve got five years to put right the wrongs that you created.”

Five years is a very generous period in my view, because these folk have been living in a situation since 2017, after the dreadful Grenfell tragedy, where their homes are of no value, where they are fearful of the risks of fire, and where they know that there is huge remediation to be done and are very concerned about when and how it will be done and what happens. We have all seen it reported where a block of flats—I think it was in Salford—had the cladding removed and sheeting put up over Christmas, and it was still there. In all the storms we had post Christmas, those poor folk were in those buildings with that sort of protection. That is not acceptable. If we can do something about it, then we should, and this is an opportunity.

The purpose of Amendment 221 is to say, “Right, you developers, you’re responsible. You’ve already had nearly five years to get your act together and have failed. We are going to give you another five. Get the work done. If you don’t, we are going to resort to this amazing provision, which the Government have put into the Bill, which says, ‘If developers don’t pay up’”—and I am saying, if the developers do not do the work—“‘then there will be no planning consents able to be implemented.’” That is very draconian, but the Minister explained in Committee that the Government were so insistent that this work be done that that clause is there, and they will implement it. It would be an additional use of that clause to force action by those who have put leaseholders and tenants into this dreadful situation.

I have explained the amendment. I feel very strongly about it, and so do my colleagues on these Benches. If the Minister fails to say, “Yes, that’s great: we’ll attach your amendment to the necessary clause”, I will test the opinion of the House, because we have to try to protect leaseholders from another decade or more of living in homes that have no value.

I want briefly to mention Amendments 231 and 232, to which I have added my name. Amendment 231 is tabled by the noble Baroness, Lady Hayman of Ullock, and is about social landlords not using the income from rents or service charges to rectify defects. It is wholly admirable, and it has our support.

Amendment 232 is a “Let’s find out what’s going on here” type of amendment—a probing amendment is what we like to call it. Again, because we have so many new amendments from the Government, it was not entirely clear to me and my noble friend Lord Stunell that the increase in the service charges or ground rents could be a way of disguising increases that the leaseholders have to pay in order to pay for fire safety defects. I hope that the Minister will be able to tell us that that is covered in one of his many amendments. With those few words, I look forward to others speaking and the Minister’s reply.

My Lords, it is a pleasure to follow the noble Baroness. I particularly like her slogan, “Get the work done.” Somehow it reminds me of a similar slogan we heard rather successfully a couple of years ago: Get Brexit done. I am glad that the Liberal Democrats are picking up some Conservative slogans.

I support Amendment 233, so ably moved by my noble friend Lord Young of Cookham in his usual erudite way; he had the detail but was still succinct. Because he set it out so well, I can be commendably brief, for a change.

I start from the position of my right honourable friend Michael Gove, and I totally support what he has said and done. I usually support what he says and does, except when he was Conservative Chief Whip and was a bit cuddly, caring and too kind. But apart from that, I liked it when he said that

“leaseholders are shouldering a desperately unfair burden. They are blameless, and it is morally wrong that they should be the ones asked to pay the price. I am clear about who should pay the price for remedying failures. It should be the industries that profited, as they caused the "problem, and those who have continued to profit, as they make it worse.”—[Official Report, Commons, 10/1/22; col. 284.]

You cannot say better than that. So I am rather sympathetic to any amendments, including the one moved by the noble Earl, Lord Lytton, trying to make sure that developers or perpetrators pay every penny. It should not be leaseholders and, ideally, it should not be the taxpayer.

However, this amendment creates a remediator of last resort and allows the Secretary of State to step in and undertake the works. In either case, it would allow the Secretary of State or the local authority to pursue the responsible developer with debt claims to recover the money laid out on remedial works. As my noble friend so ably said, that ensures that there is a failsafe mechanism in the law. The Government’s legislative proposals do not tell us what will happen if remedial works are simply not started or cannot be completed as a result of the effect of the caps imposed in the Bill and the restrictions on buy-to-let landlords.

The duty in this amendment would fill the gap. The Government’s proposals would require some sort of remediator of last resort. Because they are imposing caps on what can be collected toward non-cladding costs, the Government are creating a gap in funding, which will have to be plugged somehow. Ultimately, someone is going to have to pay; otherwise, as my noble friend said, buildings will never be fixed. This amendment allows building work to be started and buildings to be fixed, with the taxpayer providing a form of bridging finance—but they must get that money back from the building safety fund; this is not carte blanche to make the taxpayer pay for these things.

As I said, I am sympathetic to the amendment from the noble Earl, Lord Lytton. I just worry that if we adopted these four or five new clauses, we might be tearing the guts out of the Bill and would have to rewrite a lot of it. But I think his heart is in the right place in where he is aiming to go. I understand that my noble friend might be worried about the legal position under the ECHR. This is another area where the noble Earl’s amendments might technically fall foul of the ECHR. Some of us have seen legal advice circulated from Daniel Greenberg, who is well known to everyone in this House. He says:

“On the basis of this analysis, l am satisfied that the draft clauses are compatible with the Convention rights and that Ministers will be able to comply with Section 6 of the Human Rights Act 1998 (Acts of public authorities: duty not to act incompatibly with ECHR) when they come to perform the functions conferred by the draft clauses”—

referring to draft Clauses 234 to 237.

I am not capable of suggesting whether Daniel Greenberg QC is correct or not, but I would love to hear what the Minister has to say about that. If the amendments from the noble Earl, Lord Lytton, are not right, it would be helpful to hear from my noble friend how far they can go towards what the noble Earl is trying to achieve. If he is going to reject them, I would love to hear how far he can push to get as close as possible to the noble Earl’s position. With those words, I am content to support my noble friend’s Amendment 233, and I would love to hear explanations on the noble Earl’s amendments.

My Lords, I apologise for a brief Committee-style intervention, given the novel nature of the group of amendments we are looking at. I have two points.

First, I am very grateful for the agreement earlier to the amendment from the noble Lord, Lord Best. I thank my noble friend for that but, as he knows, I am concerned about the position of leaseholders who are also involved in the hard task of managing even a small development as an enfranchised leaseholder. I have a family member with an interest in that area. What happens if a cladding or other building safety issue arises? I know that such leaseholders may face big bills and responsibilities. Amendments 186 to 193 appear to make enfranchised leaseholders of this kind liable even if they have ceased to act or sold out and become previous landlords. Have I understood this correctly? If I have, then it undermines the case for enfranchisement that has been encouraged by successive Governments to get rid of excess service charges.

Secondly, a strong case has been made for the non-government amendments in this group. I too have received many worrying letters from leaseholders. Do we have a feel for the cost, especially the net cost, of these Back-Bench amendments we are debating? I feel this is a matter that will be of concern in the other place, given current fiscal pressures, and might therefore determine what is eventually agreed in this important and urgent Bill.

My Lords, this has been a very interesting debate so far. In the interests of time, I will just speak to the two amendments I have in this group, and then I will be very interested to hear the Minister’s response to the broader debate and issues that have been raised, that were clearly also debated in Committee.

Amendment 231 is about a registered social landlord not being able to

“use the income from rents or service charges to rectify defects relating to external wall systems or compartmentations where those defects result from the construction of the property or the installation of the external wall systems.”

The amendment would prevent local authorities using rental income or service charges to pay to remediate dangerous cladding or other fire safety defects. The aim is to give social housing tenants the same protection as leaseholders. While we support the Government’s efforts to protect leaseholders from the cost of remediation, the arrangements currently being considered by Ministers will mean that the cost of remediating social housing blocks falls on housing associations and council housing revenue accounts.

In the case of council housing, the main sources of income within the HRA are from tenants, in the form of rent and service charges. If the cost of fixing council housing falls on the HRA, then either rents, service charges, or potentially both, will need to increase, or maintenance improvement of social housing as well as new social housing delivery will need to be cut back. That is our concern. We clearly support the protection of leaseholders, but the protection of home owners who will eventually make a profit from the sale of their property, cannot and must not come at the expense of social housing tenants. Our proposal would prevent that outcome and instead require the Government to protect tenants such as leaseholders by requiring the industry to pay, with the taxpayer as a fallback provider of funds in recognition of any failings that created this crisis in the first place.

We discussed my Amendment 22 in Committee. It states:

“The regulations must exempt any relevant application made by or on behalf of a registered social landlord for the provision of social housing as defined under section 68 of the Housing and Regeneration Act 2008.”

The purpose behind this is to make social housing providers exempt from the additional financial burden of the Government’s proposed levy in order to prevent council tenants effectively subsidising the failures of private developers. Clause 57 of the Building Safety Bill gives the Secretary of State powers to impose a new building safety levy in England. This will contribute to government costs for remediating historical building safety defects and will apply to developers making application to the building safety regulator for building control approval. This is the new gateway 2 system, which will be introduced in building regulations.

The levy is also going to be imposed on councils, which are already facing additional financial pressures because of the last two years of the pandemic. Our concern is that as a result of this levy being imposed on councils, council tenants will effectively be subsidising the failures of private developers and paying the cost of remediating both private housing and council housing. If the levy is imposed on councils, it will increase the cost of building or refurbishing social housing, or it will increase rents. Yet the benefits of the funds will not be available to the tenants who would otherwise have benefited from lower rents or improved housing. We are asking the Minister if he will recognise the impact of the levy on social housing supply and not pit the objective of providing for those in housing need against the objective of making buildings safe, when we believe both those objectives need to be delivered by this Bill.

We know that the sector already faces huge cost pressures, not least because of the general maintenance costs associated with our ageing social housing stock. If social landlords have limited access to government funding, they will have to divert their own strained resources for maintenance and new build supply into building safety remediation, thus undermining the sector. It does concern us that if this is not taken into account, there will be a negative impact on those in housing need and particularly on the quality of housing for some of the poorest people in our country, for whom we know social housing needs a lot of improvement. This is very important to us; we believe it is a knock-on effect that must be avoided. I will listen very carefully to what the Minister has to say, but if we do not have a reply that we feel is substantive, we will be looking to divide the House on this matter.

I thank noble Lords who have spoken in this long—a little over an hour on one group—but important debate on ensuring that the polluter pays. I thank the noble Baronesses, Lady Hayman and Lady Pinnock, for Amendment 22, on the levy on social housing. The noble Baroness, Lady Hayman, raised the issues of exemptions from the building safety levy for social housing providers and who the details of the buildings levy will apply to in secondary legislation.

I am pleased to inform the noble Baroness that we are considering an exemption from the levy for affordable housing as a whole, including social housing, housing for rent or sale at least 20% below market rent or sales rates, and shared ownership. The Government recognise that applying a levy to affordable housing would increase the cost of developing affordable housing and would therefore be likely to disincentivise supply, as the noble Baroness said. We consulted on this exemption for affordable housing in our consultation on the levy, which ran from July to October last year.

I hope the noble Baroness understands that her suggestion is under careful consideration and will be addressed in secondary legislation. I will probably have to roughly translate: she should be reassured that the building safety levy will not apply to public housing. That probably makes it a little easier for her to decide what she wants to do.

I turn now to Amendment 200, on the leaseholder protection fund, tabled by the noble Baroness, Lady Pinnock, and the noble Lord, Lord Stunell, which would require the Government to use funds raised by the levy to refund leaseholders who have already paid for safety works. While a noble thing to do, the Government’s primary aim is and should be to protect leaseholders from building safety risks and enable work to be undertaken to ensure this. For this reason, we will not be able to accept the amendment.

On Amendment 221, I thank the noble Baroness, Lady Pinnock, for this amendment. We share her determination to make sure that the industry acts now to take responsibility for fixing building safety defects and that the burden should not fall on leaseholders or taxpayers. The whole tone of the amendment is to get on with remediation and I have great sympathy for that. The principal objective of Clauses 128 and 129 is to make sure that responsible parties pay and to enable us to hold the industry to account. The further amendment I spoke to earlier will make it clear that we can link the scheme to the planning system.

Together, these powers will allow us to monitor compliance of members of the responsible actors scheme and make sure that members take responsibility and act promptly to make buildings safe. We do not believe a 5-year deadline needs to be inserted into the Bill. Our intention is for the measure to achieve its objectives much more quickly. Those that do not meet the scheme conditions may lose scheme membership and may immediately be subject to the planning prohibition, as our amendments make clear. A focus on pace is already built into the Government’s approach. I hope this reassures the noble Baroness that her intention has been more than met by the Government through this Bill, just in another way.

I turn now to Amendment 231 on social landlords and defects, tabled by the noble Baronesses, Lady Hayman and Lady Pinnock. The Bill already makes provision to protect leaseholders from unreasonable costs and allow guilty parties to be pursued. It contains a requirement on landlords to take reasonable steps to pursue other cost recovery avenues before seeking to recover the costs of remediation works from leaseholders. They need to provide evidence to the leaseholders of the steps taken. Social landlords will have to undertake these measures, including pursuing construction companies or installers where applicable.

To help all landlords, including social landlords, the Government are bringing forward an ambitious toolkit of other measures to allow those responsible to be pursued. This includes extending the limitation period under Section 1 of the Defective Premises Act 1972 to apply retrospectively for 30 years. We are also allowing the High Courts to extend the reach of civil liability to associated companies and creating a new cause of action. This will allow manufacturers, distributors and sellers of construction products to be pursued where defective or mis-sold products have been used in the construction of a dwelling, or where further works are carried out to that dwelling, rendering it unfit for habitation. These amendments make it easier for those affected to force those responsible for defective buildings—developers and construction products manufacturers—to pay.

While we are making it easier to pursue third parties, in parallel, we continue to protect leaseholders, so they are not paying for unreasonable remediation costs. The Bill introduces new statutory provisions which provide that cladding remediation costs cannot be passed on to qualifying leaseholders in buildings over 11 metres. The law is already clear that service charges and any increase in cost must be reasonable. Finally, the Government set a rent policy for social housing which determines the maximum amount of rent that social tenants may be charged and the maximum amount by which rents may increase each year. The rent standard prevents unforeseen hikes to tenants’ rents and is enforced by the Regulator of Social Housing.

Turning now to Amendment 232 in the name of the noble Baroness, Lady Pinnock, and the noble Lord, Lord Stunell, the service charge is the means by which fire safety costs would be recovered and the leaseholder protections measures already prevent costs being passed to leaseholders above the permitted maximum.

I now turn to Amendment 233, tabled by my noble friends Lord Young of Cookham and Lord Blencathra, which seeks to impose a duty on local authorities to pursue responsible developers. It imposes requirements on local authorities to remediate buildings with defects and to recover funds from responsible parties. If no funds can be recovered, the Secretary of State would be required to reimburse the local authority.

We have been clear that industry is responsible for remediating defective buildings. We expect developers to remediate buildings they had a role in developing or refurbishing. Where this does not happen, building owners and landlords will have new powers to pursue those responsible. Local authorities will also have powers under our new remediation orders and remediation contribution orders, as will other regulatory bodies. However, to impose a duty on local authorities to fix buildings or pursue responsible parties is not the right approach. This would absolve industry of its duty to resolve the crisis and building owners and landlords of their responsibilities to make buildings safe. It would also place an unacceptable burden on the taxpayer.

The amendment seeks to create a taxpayer backstop by requiring the Secretary of State to reimburse local authorities for costs they cannot recover. We have been very clear that it is wrong to look to the taxpayer for further funding to fix defective buildings. For these reasons, we will not be able to accept the amendment. I want to deal with the specific issue of the remediator of last resort. I understand where my noble friend Lord Young is coming from. We have asked the industry to provide a fully funded solution for both the cladding and non-cladding costs, including fixing their own buildings and contributing to a fund for the very orphan buildings he has highlighted of between 11 and 18 metres that need cladding remediation. The focus of the industry is on fixing its own buildings, and therefore we can begin to be more focused on where we apply taxpayer funds.

Finally, I address Amendments 201, 202, 229, 234, 235, 236 and 237 in the name of the noble Earl, Lord Lytton. Amendments 201 and 202 would hold the Crown liable where properties escheat—that is probably not the right pronunciation—and would prevent liquidators and trustees in bankruptcy renouncing the leases of buildings with fire safety defects. The Bill already prevents freeholders evading liability by simply escheating their properties where they do not want to pay. It also makes provisions in relation to insolvency and bankruptcy. Freeholders will still be liable where they were, or were connected to, the developer, or had a net worth over £2 million per in-scope building on 14 February. As I have said before, taxpayers should not be held liable. For this reason, I will not be able to accept these amendments. Amendment 229 is unnecessary as landlords are already prevented from passing on costs unless they have explored all other routes of funding.

I turn to the important Amendments 234 to 237. These cover building safety cost orders, providing powers to make regulations, stipulating liability and establishing a building safety cost fund. Liability for remediation costs is already set out in the Bill, as are provisions for building owners and landlords to go after associated developers, companies and manufacturers of defective products. For this reason, I will not be able to accept these amendments.

My noble friends Lady Neville-Rolfe and Lord Young of Cookham raised the position of enfranchised leaseholders and asked whether we have made life harder for them via Amendments 186 to 193. I want to be absolutely clear that nothing in the amendments increases liabilities for enfranchised leaseholders. No leaseholder will be worse off; all are measures to make the polluter pays principle apply to enfranchised leaseholders.

I hope that I have gone some way to provide assurances on the Government’s approach.

Before my noble friend sits down, I am really grateful to him for the explanation he has set out but can he tell the House what happens where there is a building and no one has any money— the leaseholders cannot afford it, there is no freeholder and there is no developer or contractor to pursue? Who then puts that building right?

My Lords, in practical terms, we have a £5.1 billion fund, of which we have committed the first stage of £1 billion. We have an additional £4.1 billion for buildings over 18 metres and an additional £4 billion for cladding remediation, yet we are asking industry to fix its own buildings. That gives us the ability to focus on the few buildings my noble friend is talking about, because we have got the developers that built these buildings to go on and fix them in a proportionate way and we do not have to use the core of money that we already have. Noble Lords can test the opinion of the House, but that is a practical way of dealing with the problems—focusing the current funds on those few buildings where that scenario applies.

Before the Minister sits down, I thank him very much for his response to my Amendment 22. Could he just clarify something, so that I am completely clear on it? Was he saying that the Government will exempt social housing from the levy and that an SI will be brought in? If I am correct in my understanding, I would be grateful for a meeting to discuss the detail of what he proposes will happen.

My Lords, I thank the noble Baroness, Lady Hayman of Ullock, for the opportunity to clarify what I meant. In simple terms, the exemption applies to social housing. With regard to how that is implemented and the means by which we do that, I will be happy to meet the noble Baroness to set out formally how we intend to bring that forward. I have already made that comment in meetings before Report, so it has been made in public. I am happy to make that commitment on the Floor of the House and to work on how we implement that and set it out, either in writing or in a further meeting.

Amendment 21 agreed.

Amendment 22

Tabled by

22: Clause 57, page 80, line 10, at end insert—

“(4A) The regulations must exempt any relevant application made by or on behalf of a registered social landlord for the provision of social housing as defined under section 68 of the Housing and Regeneration Act 2008.”

Amendment 22 not moved.

Amendment 23

Moved by

23: Clause 57, page 80, line 43, at end insert—

““building industry scheme” means a scheme established under section 128 of the Building Safety Act 2022;”Member’s explanatory statement

This amendment is consequential on the previous amendment to this Clause in the name of the Minister.

Amendment 23 agreed.

Clause 60: Overview of Part

Amendments 24 and 25

Moved by

24: Clause 60, page 83, line 31, leave out paragraph (e)

Member’s explanatory statement

This amendment is consequential on the amendments in the name of the Minister leaving out Clauses 82 to 86 (which remove provision about building safety managers).

25: Clause 60, page 84, line 14, leave out “and Schedule 8”

Member’s explanatory statement

This amendment is consequential on the amendment to leave out Schedule 8.

Amendments 24 and 25 agreed.

Amendment 26

Moved by

26: After Clause 74, insert the following new Clause—

“Review of provisions relating to accountable persons

(1) By the end of the period of two years beginning with the day on which section 71 comes into force, the Secretary of State must undertake a review of the financial impact of accountable persons on leaseholders in higher-risk buildings.(2) The review under subsection (1) may consider any matter appearing to the Secretary of State to be relevant, but must identify and quantify—(a) all costs passed on to leaseholders in relation to any function of any accountable person under Part 4 of this Act; and(b) any other costs passed on to leaseholders by any accountable persons.(3) A Minister of the Crown must, as soon as practicable on completion of the review, lay a statement on its findings before Parliament.(4) This section comes into force on the day this Act is passed.”Member’s explanatory statement

This amendment requires the government to identify and quantify all costs passed on to leaseholders under the accountable person regime, for example to check if Building Safety Manager costs have been rebadged and passed on.

Your Lordships need to calm yourselves.

On Saturday, I went to visit my home in Wood Green. It looks like a bomb site: there is no roof and there are huge amounts of scaffolding and barbed-wire fences surrounding the block of 25 two-floor maisonettes. When you arrive, you see a huge multicoloured fluorescent sign with the words “Zero tolerance” and then a list of prohibited activities, all relating to safety: “Safety helmets must be worn”; “Safety footwear must be worn”; “No smoking”; “Danger: tripping hazards”; “Danger: men working ahead”; “Danger: no children on the site”. We are told that “Safety signs and procedures must be observed.” I therefore know, having visited my home in Wood Green, that Haringey Council is definitely keen on promoting safety.

Let us consider this. My home is in this state because, two years ago, there was a fridge fire in one maisonette. The roof of the block caught fire and the other flats, including mine, were drenched by the fire brigade in putting out the fire. It was not too bad and, to be honest, we were so glad that no one was hurt and we were relieved to get out safely. But that was two years ago this month—two years in which 25 families have been effectively homeless. As a leaseholder, the council, which is my freeholder, took my front door key off me—it is not a glamorous house, by the way, but it is mine, or so I thought—and basically said that I would get it back when the block had been made safe. It is now two years later and I am still not back, and I have no idea when I can go home.

I have mentioned this story before. My retelling it is not therapy but to show how what starts as an unremarkable but unpleasant event—a fire, albeit in lockdown—can escalate and turn into a nightmarish, never-ending misery for so many people. At every turn, as leaseholders and tenants, we have been faced with layers of bureaucracy getting in our way, more and more people to deal with, more and more issues being raised to explain why we are not returning home, and dwindling effectiveness in getting our homes back to us. We leaseholders and council tenants have been shown a certain indifference to our plight. If I am honest, all that has been much worse than the original fire, but it is okay because Haringey Council has put up lots of safety signs. Safety trumps all, and is used to say to us, “Shut up and put up.”

I arrived at this place during the time of my eviction from the house and was inspired by the right reverend Prelate the Bishop of St Albans and the noble Baroness, Lady Pinnock, whom I heard speak on what was happening to leaseholders. I thought, “I’m going to join that debate.” I was inspired by their dedication and what they said, and that is how I ended up here.

The moral of this tale is that I want to make sure that the Bill, which is well-intentioned on safety, does not in the name of safety end up with the unintended escalation of a whole new set of problems for leaseholders, which was the point of the analogy with my flat fire. The amendment—I actually prefer a similar but better amendment from the noble Baroness, Lady Neville-Rolfe, who is trying to do the same thing—would require the Government to commit to review the impact of the legislation in a couple of years. It says to the Government, “Can you just check in all instances that the legislation doesn’t cause more problems and is actually doing what you want it to do, or what we in the House have been told you want it to do?”

We are rather rushing through the Bill. Whole swathes of new amendments have emerged. These have been put in not necessarily by noble Lords but by the Government. I was happy to hear the Minister explain that there are so many amendments because he, the Secretary of State and the department are listening. But whatever way you look at it, we, as people scrutinising the Bill, are being presented with hundreds of amendments that have been quite hard to get one’s head round in the time. In many ways, the Bill is not being fully scrutinised line by line. As the noble Lord, Lord Jordan, put it, it really is a legislative quagmire to wade through and it is very difficult.

It has been almost impossible to read the amendments, assess what their nuances mean and look for what the consequences might be. I appreciate that that is for me and that I am a lay person on technicalities, but luckily, as has been mentioned, leaseholders have a few important voluntary heroes who have helped the rest of us through. I know that the lawyer and leaseholder Liam Spender has already been name checked for his multicoloured sheet, which has already been shown, but if noble Lord have not seen it is well worth studying because it really does explain things. There are also all sorts of reporters for the Leasehold Knowledge Partnership and intrepid leaseholders doing their own work, trying to get to grips with what all these new amendments and the Bill mean.

I mention that because it would be irresponsible if we passed this Bill and then let it sail off into the distance without any idea that it will be looked at again. I worry that the Government think that all will be solved once the Bill has passed. I do not want hostages to fortune. We have had lots of reassurances today, we have been told not to worry and have had great rhetoric from the Government on proportionality and common sense, but we therefore need to be able to check that that rhetoric will be fulfilled.

Finally, this is not all about leaseholders. My hunch is that the Bill has a range of problems because it has gone along uncritically with the picture painted by Dame Judith Hackitt that somehow every aspect of living in a flat should be seen as a potential hazard and a dangerous fire risk. For the last few years—understandably because of Grenfell—there has been a sort of hyperactive “something must be done” mentality that has led to the EWS1 crisis and caused many of the issues that informed the discussion on the previous group of amendments on innocent victims paying for excessive remediation.

All I ask is that this review checks that an overzealousness does not emerge from the legislation that skews priorities and means the Government’s valiant efforts at common sense and proportionality somehow end up in a proliferation of chunky formalised procedures.

I will also reflect on the other people we should bear in mind. I have emphasised leaseholders throughout this contribution, but in my Second Reading speech I also talked about the construction industry. I want to make sure we do not end up stymying the house-building programme through overregulation. There is a danger that, as we have heard in some of the contributions, we describe the construction business as though they are all cowboy builders, which is a rather insulting caricature. With another hat on, at another time, I would be saying the big crisis in this country is a lack of housing and we need to “Build, build, build”, so I get worried when the Home Builders Federation says that it is concerned that there will be difficulties with housing delivery if too much of a burden is put on housebuilders. You might say, “I am not going to feel sorry for them,” but we do not want to get ourselves into a situation where the extraction of funds from the construction industry means that the UK home building industry—which is important to many parts of levelling up, social equality and so on—is stymied.

One way or another, I can think of nothing more sensible for a common-sense Minister than to say, “In a couple of years, we’ll review all this and check that your hunches are wrong, Lady Fox.” That will be fine. The Minister referred to me earlier as Oliver Twist—always wanting more. This is only a little bit more, but you cannot change the world unless you want more, and I intend to demand a lot more, but only a little more in this Bill. I beg to move.

My Lords, I rise to speak to my Amendment 264A in this group. I thank my noble friend the Minister, as others have done, for all he has done to make this Bill a reality.

The object of the Bill, as I see it, is to get defects remediated to a proportionate extent as quickly as possibly—mainly cladding, sometimes installed, ironically, to improve insulation in the interests of carbon reduction, but also other unsafe matters. There have turned out to be more defects than anticipated and we have witnessed an unfortunate record by builders and others of not doing enough to put matters right. The Bill seeks to get things remedied quickly. However, it is costing an eye-watering amount to home owners, leaseholders and the Exchequer, and the Bill therefore also seeks to establish an equitable share-out of the costs including appropriate contributions by the supply chain.

It is a long saga and some of us in this House have been seeking solutions for a very long time and welcome the principle of legislation. However, unusually, the Bill has been changed completely by government amendments tabled since it left the House of Commons, yet we have not had an updated impact assessment to help us assess the costs and benefits of the revised proposals. This is poor, given the financial and other burdens on different stakeholders, as the noble Baroness, Lady Fox of Buckley, has just explained. However, as the chair of the Built Environment Committee I welcome today’s concession from the Minister on social housing, which I hope will be less costly, as it will give welcome clarity.

I have a great deal of respect for the Health and Safety Executive, as I have said before, and for the Minister who has fought so hard to present credible, effective and sensible proposals. However, it has been a rush, and I believe we must have a review clause in the Bill beyond the five-year independent review in Clause 152, and with more teeth. The noble Baroness, Lady Fox of Buckley, has constructively proposed one option; I hope my version may recommend itself to colleagues across the House and to my noble friend. I believe that agreeing to this could help to narrow current, very real, differences on the Bill particularly in the next group of amendments.

I will explain why. I am proposing a review within two years. It would look at the impact of the provisions of the Act. If the review found that there were serious problems for leaseholders, for home owners who could not buy or sell property, or for any other group, it would make recommendations.

The Secretary of State could implement them. There is lots of discretion here, and “may” not “must” is used. He or she would do that by regulation in so far as it relates to building safety or building standards. This would be done by affirmative resolution, since we are talking about wide powers and changes to primary legislation. It is not something I would usually espouse, but needs must. The power would lapse after five years, by which time I believe the legacy of Grenfell must and will be behind us. Clause 152 would then provide the permanent review process.

I agreed to appropriate review clauses when I was on the Front Bench, and I believe strongly that they can help to oil the wheels of urgent legislation such as this, so I hope that my noble friend the Minister and the Secretary of State may come to see this as a speedy way of securing agreement to this important Bill, particularly if it proceeds to ping-pong.

My Lords, I rise with pleasure to follow the noble Baroness, Lady Neville-Rolfe. I agree with almost everything she said and very strongly back her amendment. The political spread we have just achieved across the House in that regard is interesting.

I sat through the previous group, and I am indebted to the noble Baroness, Lady Pinnock, for counting the 70 amendments in it. I listened to the detailed and informative contributions, particularly from the noble Lord, Lord Young of Cookham, and the noble Earl, Lord Lytton. I learned a great deal about waterfalls. I am still not entirely convinced that there is a solution to the “if no one’s left to pay who’s going to pay?” problem. None the less, it is very clear that this is an unusual Bill and that we have very broad agreement on what we are trying to achieve; that is, that the perpetrator pays to ensure that innocent leaseholders and home owners who through no fault of their own have found themselves trapped in awful, incredibly stressful, dangerous circumstances are not the ones who ultimately suffer and that the people who create the problem pay for it.

However, given the complexity of everything we have just done, we cannot be sure that the Bill will deliver and that there will not be unexpected hitches and problems along the way. I agree with the noble Baroness, Lady Neville-Rolfe, that five years is just too long. The noble Baroness, Lady Fox, spoke about the personal experience of being stuck out of a home, and some people are stuck in homes in awful situations. Two years is the right time to look at this in the round.

This may be where I slightly part company with two earlier speakers. I think there is broad agreement that we have a huge cultural problem in the building industry. I should perhaps declare a historic interest as the daughter of a builder. I knew quite a bit about the Australian building industry and lots of the problems that I saw in that situation have been magnified and intensified by economic developments over the past few decades. We have mass housebuilders that are far better at being cash cows than at producing homes. We are trying to change this situation and the whole culture of the industry. We are trying to get homes that are produced so that people have a secure, stable, affordable place to live. It is such an enormous change that we cannot wait five years to review this, so I commend the amendment tabled by the noble Baroness, Lady Neville-Rolfe.

I, too, commend the noble Baroness, Lady Neville-Rolfe, on this amendment. Given the circumstances of the Bill, the number of variations in it and the sheer number of moving parts involved, a review is essential for precisely the reasons she said, and I support the amendment.

My Lords, I am grateful to the noble Baroness, Lady Fox of Buckley, and my noble friend Lady Neville-Rolfe for this insightful debate.

Amendment 26 from the noble Baroness, Lady Fox, would require a review of the financial impact of the new regime. I reassure the noble Baroness that a review is already required by Clause 152, which provides that:

“The Secretary of State must appoint an independent person to carry out a review of”

the system of regulation of building safety and standards and the system of regulation for construction products. Importantly, the reviewer is not limited and may choose to review connected matters, including the matters mentioned in the noble Baronesses’ amendments.

Similarly, Amendment 246A in the name my noble friend Lady Neville-Rolfe would require a review of the impact of the Act. I apologise for the mix-up that resulted in my addressing this amendment in an earlier group. I will repeat for the record that we believe that this further replicates Clause 152 in the Bill and therefore we believe this is unnecessary.

What I do say to my noble friend is that the Secretary of State has to appoint someone to carry out the review within five years, so that is a long-stop date. I am very happy to meet my noble friend to ensure that we get going with this review at the very earliest opportunity to make sure that that long-stop date is comfortably met. We also need to make sure that this review is substantive and learns the lessons of a new regime in the broadest possible sense and addresses the points raised by the noble Baroness, Lady Fox of Buckley, as well those raised by my noble friend Lady Neville-Rolfe, who has had tremendous Front-Bench experience as well as experience as a distinguished civil servant.

With those explanations, I kindly ask the noble Baroness, Lady Fox, to withdraw her amendment and my noble friend Lady Neville-Rolfe not to press her amendment.

I will withdraw but I will come back to the Minister. I think it is important to come back to the Minister and say if it is within five years, I would like it to be brought forward sooner. I do not know why he does not just accept the two years but let us have the meeting to discuss it. At this point, I will not press the amendment and beg leave to withdraw.

Amendment 26 withdrawn.

Clause 79: Applications for building assessment certificates

Amendment 27

Moved by

27: Clause 79, page 94, line 34, leave out paragraph (a)

Member’s explanatory statement

This amendment is consequential on the amendments in the name of the Minister leaving out Clauses 82 and 85.

Amendment 27 agreed.

Clause 80: Building assessment certificates

Amendment 28

Moved by

28: Clause 80, page 96, line 4, leave out paragraph (a)

Member’s explanatory statement

This amendment is consequential on the amendments in the name of the Minister leaving out Clauses 82 and 85.

Amendment 28 agreed.

Clause 81: Duty to display building assessment certificate etc

Amendment 29

Moved by

29: Clause 81, page 96, line 23, leave out “, and any building safety manager,”

Member’s explanatory statement

This amendment is consequential on the amendments in the name of the Minister leaving out Clauses 82 to 86 (which remove provision about building safety managers).

Amendment 29 agreed.

Clause 82: Duty to appoint building safety manager

Amendment 30

Moved by

30: Clause 82, leave out Clause 82

Member’s explanatory statement

This amendment and the amendments leaving out Clauses 83 to 86 in the name of the Minister remove provision about building safety managers.

Amendment 30 agreed.

Clause 83: Appointment of building safety manager where multiple accountable persons

Amendment 31

Moved by

31: Clause 83, leave out Clause 83

Member’s explanatory statement

This amendment and the amendments leaving out Clauses 82 and 84 to 86 in the name of the Minister remove provision about building safety managers.

Amendment 31 agreed.

Clause 84: Terms of appointment of building safety manager

Amendment 32

Moved by

32: Clause 84, leave out Clause 84

Member’s explanatory statement

This amendment and the amendments leaving out Clauses 82 and 83 and 85 and 86 in the name of the Minister remove provision about building safety managers.

Amendment 32 agreed.

Clause 85: Exception from duty to appoint building safety manager

Amendment 33

Moved by

33: Clause 85, leave out Clause 85

Member’s explanatory statement

This amendment and the amendments leaving out Clauses 82 to 84 and 86 in the name of the Minister remove provision about building safety managers.

Amendment 33 agreed.

Clause 86: Section 85: further provision where multiple accountable persons

Amendment 34

Moved by

34: Clause 86, leave out Clause 86

Member’s explanatory statement

This amendment and the amendments leaving out Clauses 82 to 85 in the name of the Minister remove provision about building safety managers.

Amendment 34 agreed.

Amendment 35

Tabled by

35: After Clause 88, insert the following new Clause—

“Duty to avoid disability discrimination

(1) The steps taken by the accountable person pursuant to section 88 must include specific steps to ensure that no prohibited conduct relating to the protected characteristic of disability occurs that is unlawful contrary to Part 3 of the Equality Act 2010.(2) Those steps must include the development of personal emergency evacuation plans for persons with disabilities.(3) The Secretary of State must publish guidance in relation to the content of a personal emergency evacuation plan within 6 months of the commencement of this section.(4) In any proceedings concerning the steps taken by the accountable person pursuant to this Part of this Act, or Part 3 of the Equality Act 2010, this guidance is admissible as evidence and must be taken into account.”Member’s explanatory statement

This new Clause puts a duty on the accountable person to avoid disability discrimination, which includes the development of personal emergency evacuation plans for persons with disabilities.

My Lords, this amendment was debated earlier. I just want to repeat the point I made then that I thank the Minister for the offer of the meeting tomorrow. If we have not made some progress on the issue of PEEPs and safety for disabled people, I will bring back an amendment at Third Reading but, in the meantime, I beg leave to withdraw.

Amendment 35 withdrawn.

Amendment 36 not moved.

Clause 95: Residents’ engagement strategy

Amendment 37

Moved by

37: Clause 95, page 105, line 16, leave out “intervals” and insert “times”

Member’s explanatory statement

This amendment requires the strategy to be reviewed at times prescribed by regulations.

I am very pleased to move a group of amendments that are focused on ensuring that leaseholders are protected from costs related to historical building safety defects. The package of leaseholder protections eradicates the idea that leaseholders should be the first port of call to pay to fix historical building safety defects. In fact, in drafting these clauses we started with the presumption that leaseholders should not have to pay anything, a sentiment that I know is shared with noble Lords from all sides of this House.

It is only right that building owners and landlords share in the costs of fixing dangerous buildings and we have carefully engineered—

I was under the impression that this was grouped with a whole group of amendments that had been debated and therefore there was no need for a further debate. If I am wrong, of course I apologise.

I will take the blame for that. I should have said moved formally and that would have encouraged the noble Lord, Lord Greenhalgh, to say “moved formally”. I will accept the admonition on that point. The noble Lord has saved the House some considerable time because I can see the page of that speech now fluttering in the wind.

Amendment 37 agreed.

Amendment 38

Moved by

38: Clause 95, page 105, line 17, at end insert—

“(c) in prescribed circumstances, consult relevant persons and prescribed persons on the strategy and take any representations made on the consultation into account when next reviewing the strategy;(d) act in accordance with the strategy.”Member’s explanatory statement

This amendment requires the principal accountable person to consult on the residents’ engagement strategy, and to act in accordance with the strategy.

Amendments 39 and 40, as amendments to Amendment 38, not moved.

Amendment 38 agreed.

Amendments 41 to 45

Moved by

41: Clause 95, page 105, line 26, leave out “an accountable person will consult relevant persons” and insert “relevant persons will be consulted”

Member’s explanatory statement

This amendment is a drafting change.

42: Clause 95, page 105, line 30, leave out “an accountable person’s”

Member’s explanatory statement

This amendment is a drafting change.

43: Clause 95, page 105, line 39, at end insert—

“(c) any prescribed person.”Member’s explanatory statement

This amendment requires an accountable person to give a copy of the strategy to a person prescribed by regulations.

44: Clause 95, page 106, line 7, at end insert—

“(aa) make provision about the preparation, review or revision of a residents’ engagement strategy, in cases where there is more than one accountable person for the building;”Member’s explanatory statement

This amendment enables regulations to make provision about the making, review or revision of a strategy, in cases where there is more than one accountable person.

45: Clause 95, page 106, line 9, at end insert—

“(c) make provision about consultations under this section.”Member’s explanatory statement

This amendment enables regulations to make provision about consultations on a strategy.

Amendments 41 to 45 agreed.

Clause 101: Access to premises

Amendments 46 and 47 not moved.

Schedule 7: Special measures

Amendments 48 to 70

Moved by

48: Schedule 7, page 200, line 7, leave out paragraph (b)

Member’s explanatory statement

This amendment is consequential on the amendments in the name of the Minister leaving out Clauses 82 to 86 (which remove provision about building safety managers).

49: Schedule 7, page 202, leave out lines 8 and 9

Member’s explanatory statement

This amendment is consequential on the removal of the building safety charge as a separate charge.

50: Schedule 7, page 202, line 12, leave out from “building” to end of line 14

Member’s explanatory statement

This amendment is consequential on the removal of the building safety charge as a separate charge.

51: Schedule 7, page 202, line 21, leave out from “Part” to end of line 22

Member’s explanatory statement

This amendment is consequential on the amendment in the name of the Minister leaving out Clause 82.

52: Schedule 7, page 202, line 25, leave out paragraph (a)

Member’s explanatory statement

This amendment is consequential on the removal of the building safety charge as a separate charge.

53: Schedule 7, page 203, line 17, leave out sub-paragraph (4)

Member’s explanatory statement

This amendment is consequential on the amendment in the name of the Minister leaving out Clause 82.

54: Schedule 7, page 204, line 6, leave out “the” and insert “relevant”

Member’s explanatory statement

This amendment provides that only “relevant” rights and liabilities of an accountable person for the building become the rights and liabilities of the special measures manager under paragraph 7 of the Schedule.

55: Schedule 7, page 204, line 6, leave out “a relevant person” and insert “an accountable person for the building”

Member’s explanatory statement

This amendment is consequential on the Minister’s amendment at page 204, line 35.

56: Schedule 7, page 204, line 7, leave out second “the”

Member’s explanatory statement

This amendment is consequential on the Minister’s first amendment at page 204, line 6.

57: Schedule 7, page 204, line 11, leave out “a relevant person” and insert “an accountable person for the building”

Member’s explanatory statement

This amendment is consequential on the Minister’s amendment at page 204, line 35.

58: Schedule 7, page 204, line 12, leave out paragraph (c) and insert—

“(c) one or more rights or liabilities of that person under the contract are relevant rights or liabilities,”Member’s explanatory statement

This amendment is consequential on the Minister’s first amendment at page 204, line 6.

59: Schedule 7, page 204, line 17, at end insert—

“(3A) A right or liability of an accountable person for the building under a relevant contract is a “relevant right or liability” if it relates to a function of that person under, or under regulations made under, this Part in relation to the building.”Member’s explanatory statement

This amendment defines relevant right or liability for the purposes of paragraph 7 of the Schedule.

60: Schedule 7, page 204, line 17, at end insert—

“(3B) The notice under sub-paragraph (3)(e) must state which rights or liabilities under the contract are relevant rights or liabilities.”Member’s explanatory statement

This amendment is consequential on the Minister’s first amendment at page 204, line 6.

61: Schedule 7, page 204, line 21, leave out “a relevant person” and insert “an accountable person for the building”

Member’s explanatory statement

This amendment is consequential on the Minister’s amendment at page 204, line 35.

62: Schedule 7, page 204, line 23, leave out “relevant function of a relevant person” and insert “function of that person under, or under regulations made under, this Part in relation to the building”

Member’s explanatory statement

This amendment is consequential on the Minister’s amendment at page 204, line 35.

63: Schedule 7, page 204, line 32, leave out “a relevant person” and insert “an accountable person for the building”

Member’s explanatory statement

This amendment is consequential on the Minister’s amendment at page 204, line 35.

64: Schedule 7, page 204, line 35, leave out sub-paragraph (7)

Member’s explanatory statement

This amendment is consequential on the amendments in the name of the Minister leaving out Clauses 82 to 86 (which remove provision about building safety managers).

65: Schedule 7, page 208, line 3, leave out “building safety charges or”

Member’s explanatory statement

This amendment is consequential on the removal of the building safety charge as a separate charge.

66: Schedule 7, page 210, line 37, leave out “building safety charges or”

Member’s explanatory statement

This amendment is consequential on the removal of the building safety charge as a separate charge.

67: Schedule 7, page 211, line 3, after “making” insert “, variation or discharge”

Member’s explanatory statement

This amendment is consequential on the Minister’s amendment at page 211, line 11.

68: Schedule 7, page 211, line 5, leave out sub-paragraph (2)

Member’s explanatory statement

This amendment is consequential on the Minister’s amendment at page 211, line 11.

69: Schedule 7, page 211, line 11, leave out paragraph (b)

Member’s explanatory statement

This amendment is consequential on the amendments in the name of the Minister leaving out Clauses 82 to 86 (which remove provision about building safety managers).

70: Schedule 7, page 212, leave out line 18

Member’s explanatory statement

This amendment is consequential on the removal of the building safety charge as a separate charge.

Amendments 48 to 70 agreed.

Clause 112: Guidance

Amendment 71

Moved by

71: Clause 112, page 115, line 19, leave out paragraph (a)

Member’s explanatory statement

This amendment is consequential on the amendments in the name of the Minister leaving out Clauses 82 and 85.

Amendment 71 agreed.

Clause 114: Managers appointed under Part 2 of the Landlord and Tenant Act 1987

Amendment 72

Moved by

72: Clause 114, page 116, line 30, leave out “section 110” insert “paragraph 8(3) of Schedule 7”

Member’s explanatory statement

This amendment is a drafting change.

Amendment 72 agreed.

Amendment 73

Moved by

73: After Clause 114, insert the following new Clause—

“Building safety directors of resident management companies

(1) This section applies in relation to a resident management company that is an accountable person for a higher-risk building.(2) The articles of association of the resident management company have effect as if they included such provision as may be prescribed relating to—(a) eligibility for appointment as a director of the company, for a building safety purpose;(b) the appointment of a director for such a purpose;(c) the entitlement to remuneration of a director appointed for such a purpose;(d) the removal of a director so appointed.(3) Subsection (2) has effect—(a) whether or not the provision is adopted by the company;(b) whether the company was formed before or after the coming into force of this section;(c) notwithstanding anything in the company’s articles of association.(4) In this section—“building safety purpose” means the purpose of supporting the resident management company in complying with its duties under this Part or under regulations made under this Part;“resident management company” has the meaning given by regulations made by the Secretary of State.”Member’s explanatory statement

This new Clause makes provision about directors of a resident management company that is an accountable person.

Amendment 73 agreed.

Clause 115: Implied terms in leases and recovery of safety related costs

Amendments 74 to 84

Moved by

74: Clause 115, page 117, line 4, leave out “(6)” and insert “(5)”

Member’s explanatory statement

This amendment is consequential on other amendments to this Clause in the name of the Minister.

75: Clause 115, page 117, line 8, leave out “in England”

Member’s explanatory statement

This amendment is a drafting change.

76: Clause 115, page 118, leave out lines 36 to 38

Member’s explanatory statement

This amendment is consequential on the amendments in the name of the Minister leaving out Clauses 82 to 86 (which remove provision about building safety managers).

77: Clause 115, page 119, leave out line 1

Member’s explanatory statement

This amendment is consequential on the amendments in the name of the Minister leaving out Clauses 82 to 86 (which remove provision about building safety managers).

78: Clause 115, page 119, line 7, leave out “Implied terms relating to building safety charges” and insert “Liability for building safety costs”

Member’s explanatory statement

This amendment is consequential on a subsequent amendment to this clause in the Minister's name which removes the building safety charge as a separate charge.

79: Clause 115, page 119, line 8, leave out “in England”

Member’s explanatory statement

This amendment is a drafting change.

80: Clause 115, page 119, leave out lines 10 to 17

Member’s explanatory statement

This amendment removes the building safety charge as a separate charge.

81: Clause 115, page 119, line 26, at end insert—

“(5A) The relevant lease has effect—(a) as if the matters for which the service charge is payable under the lease included the taking of building safety measures by or on behalf of a relevant person (insofar as this would not otherwise be the case), and(b) where the lease contains different methods for apportioning different relevant costs (within the meaning of section 18), as if it provided for any costs for which the tenant is liable by virtue only of paragraph (a) to be apportioned in the same way as costs incurred in connection with insuring the building.(5B) “Building safety measure” means any of the following—(a) applying for registration of a higher-risk building in accordance with section 77 of the Building Safety Act 2022;(b) applying for a building assessment certificate in accordance with section 78 of that Act;(c) displaying a building assessment certificate in accordance with section 81 of that Act;(d) assessing building safety risks in accordance with section 87 of that Act;(e) taking reasonable steps in accordance with section 88 of that Act (management of building safety risks), other than steps involving the carrying out of works as referred to in section 88(2);(f) preparing and revising a safety case report in accordance with section 89 of that Act;(g) notifying the regulator of a safety case report, and giving a copy of a safety case report to the regulator, in accordance with section 90 of that Act;(h) establishing and operating a mandatory occurrence reporting system, and giving information to the regulator, in accordance with section 91 of that Act;(i) keeping information and documents in accordance with section 92 of that Act;(j) giving information and documents to any person in accordance with section 93, 94 or 96 of that Act;(k) complying with any duty under section 95 of that Act (residents’ engagement strategy);(l) establishing and operating a system for the investigation of complaints in accordance with section 97 of that Act;(m) giving a contravention notice to a resident, and making an application to the county court, in accordance with section 100 of that Act;(n) making a request to enter premises, or making an application to the county court, in accordance with section 101 of that Act (access to premises).(5C) For the purposes of this section any of the following incurred in connection with the taking of a building safety measure are to be regarded as incurred in taking the measure—(a) legal and other professional fees;(b) fees payable to the regulator;(c) management costs.” Member’s explanatory statement

This amendment provides that the service charge provisions under the lease have effect as if they covered costs incurred or to be incurred in connection with the taking of building safety measures.

82: Clause 115, page 119, leave out line 28

Member’s explanatory statement

This amendment is consequential on the removal of the building safety charge as a separate charge.

83: Clause 115, page 119, line 31, at end insert—

““relevant person” means—(a) if the landlord is an accountable person for the building, the landlord or a special measures manager for the building;(b) otherwise, any superior landlord who is an accountable person for the building or a special measures manager for the building;”Member’s explanatory statement

This amendment, which creates a definition of “relevant person”, is consequential on other amendments to this Clause in the name of the Minister.

84: Clause 115, page 119, line 36, at end insert—

“(7) The Secretary of State may by regulations made by statutory instrument amend subsection (5B) so as to add, remove or modify a building safety measure.(8) The regulations may make incidental, transitional or saving provision.(9) A statutory instrument containing regulations under subsection (7) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”Member’s explanatory statement

This amendment confers a power to amend the definition of “building safety measure”.

Amendments 74 to 84 agreed.

Amendment 85

Moved by

85: Clause 115, page 119, line 36, at end insert—

“30DA Liability for remuneration of building safety director of resident management company etc(1) This section applies to a lease of premises which consist of or include a dwelling in a higher-risk building if—(a) the landlord is an accountable person for the building,(b) the landlord is—(i) a resident management company within the meaning of section (Building safety directors of resident management companies) of the Building Safety Act 2022, or(ii) an RTM company within the meaning of Chapter 1 of Part 2 of the Commonhold and Leasehold Reform Act 2002 (right to manage), and(c) the tenant is liable to pay a service charge.(2) The lease has effect—(a) as if the matters for which the service charge is payable under the lease included remunerating any director of the landlord appointed for a building safety purpose (insofar as this would not otherwise be the case), and (b) where the lease contains different methods for apportioning different relevant costs (within the meaning of section 18), as if it provided that any costs for which the tenant is liable by virtue only of paragraph (a) to be apportioned in the same way as costs incurred in connection with insuring the building.(3) In this section—“building safety purpose” means the purpose of supporting the landlord in complying with its duties under Part 4 of the Building Safety Act 2022 or under regulations made under that Part;“landlord” includes any person who has a right under the lease to enforce payment of a service charge;“service charge” has the meaning given by section 18;“tenant” includes any person who has an obligation under the lease to pay a service charge.”Member’s explanatory statement

This amendment makes provision for the recovery from tenants of costs incurred by a residents’ company in remunerating a director of the company, appointed in connection with its building safety duties.

Amendment 86 (to Amendment 85)

Moved by

86: Clause 115, in subsection (2) before paragraph (a) insert—

“(za) as if it contained provision authorising the appointment of a person (whether or not a leaseholder or a resident of the building) as a director of the landlord for a building safety purpose,”Member’s explanatory statement

The new clause “Building safety directors of resident management companies” which stands in the name of the Minister ensures that any restrictions in the Articles of Association of a residents management company are disapplied insofar as they conflict with the new power to appoint a professional director to discharge building safety duties. This amendment supplements that amendment by ensuring that any similar restriction imposed by a lease is also disapplied.

Amendment 86 (to Amendment 85) agreed.

Amendment 85, as amended, agreed.

Amendments 87 to 99

Moved by

87: Clause 115, page 119, line 37, leave out “section 30C or 30D” and insert “sections 30C to 30DA”

Member’s explanatory statement

This amendment is consequential on the second amendment in the name of the Minister at page 119, line 36.

88: Clause 115, page 119, line 39, leave out “or 30D”

Member’s explanatory statement

This amendment is consequential on other amendments to this Clause in the name of the Minister.

89: Clause 115, page 120, line 2, leave out “or 30D”

Member’s explanatory statement

This amendment is consequential on other amendments to this Clause in the name of the Minister.

90: Clause 115, page 120, line 5, at end insert—

“(2) A covenant or agreement, whether contained in a lease to which section 30D or 30DA applies or in an agreement collateral to such a lease, is void insofar as it purports to modify the effect of section 30D(5A) or 30DA(2).”Member’s explanatory statement

This amendment is consequential on other amendments to this Clause in the name of the Minister.

91: Clause 115, page 120, line 8, leave out “section 30C or 30D (implied terms)” and insert “any of sections 30C to 30DA (implied terms etc)”

Member’s explanatory statement

This amendment is consequential on other amendments to this Clause in the name of the Minister.

92: Clause 115, page 120, line 14, leave out “or 30D(2)”

Member’s explanatory statement

This amendment is consequential on other amendments to this Clause in the name of the Minister.

93: Clause 115, page 120, line 20, leave out “or 30D(2)”

Member’s explanatory statement

This amendment is consequential on other amendments to this Clause in the name of the Minister.

94: Clause 115, page 120, line 23, leave out “and Schedule 2”

Member’s explanatory statement

This amendment is consequential on other amendments to this Clause in the name of the Minister.

95: Clause 115, page 120, leave out lines 26 and 27

Member’s explanatory statement

This amendment is consequential on the amendments in the name of the Minister leaving out Clauses 82 to 86 (which remove provision about building safety managers).

96: Clause 115, page 120, line 35, leave out subsections (3) and (4) and insert—

“(3) After section 20E (inserted by section 134) insert—“20F Limitation of service charges: excluded costs for higher-risk buildings(1) This section applies in relation to a lease to which section 30D (higher-risk buildings: building safety costs) applies.(2) Excluded costs are not to be regarded as relevant costs to be taken into account in determining the amount of service charge payable by a tenant under the lease.(3) In this section “excluded costs” means any of the following incurred in connection with Part 4 of the Building Safety Act 2022 or regulations made under that Part—(a) costs incurred or to be incurred by or on behalf of a relevant person solely as a result of any penalty imposed or enforcement action taken by the regulator;(b) legal costs incurred or to be incurred by or on behalf of a relevant person in connection with special measures order proceedings;(c) costs incurred or to be incurred by or on behalf of a relevant person by reason of any negligence, breach of contract or unlawful act on the part of that relevant person or a person acting on their behalf;(d) costs of a description prescribed by regulations made by the Secretary of State that are incurred or to be incurred by or on behalf of an accountable person or special measures manager for the building in connection with the taking of building safety measures.(4) In this section—“building safety measures” has the meaning given by section 30D;“enforcement action” means action taken with a view to, or in connection with—(a) securing compliance with Part 4 of the Building Safety Act 2022 or regulations made under that Part, or(b) the imposition of a sanction in respect of a contravention of that Part or those regulations; “the regulator” has the meaning given by section 118 of the Building Safety Act 2022;“relevant person” means—(a) where the landlord under the lease is an accountable person for the higher-risk building, the landlord or a special measures manager for the higher-risk building;(b) where the landlord is not such an accountable person, any superior landlord who is an accountable person for the higher-risk building or a special measures manager for the higher-risk building;“special measures order proceedings” means any proceedings relating to the making, variation or discharge of, or the giving of directions in relation to, a special measures order under Schedule 7 to the Building Safety Act 2022 (including any appeals in relation to such proceedings).(5) Regulations under this section are to be made by statutory instrument.(6) A power to make regulations includes power to make—(a) incidental, transitional or saving provision;(b) different provision for different purposes.(7) A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of either House of Parliament.”(4) In section 21 (service charge information) after subsection (6) insert—“(6A) In particular, regulations which make provision about higher-risk buildings (within the meaning of Part 4 of the Building Safety Act 2022) need not contain provision of a kind mentioned in subsection (2) or (3).”(4A) In section 30 (meaning of “landlord” and “tenant”)—(a) after the definition of “landlord” insert—““services” includes, in relation to a dwelling in a higher-risk building (as defined by section 30H), building safety measures within the meaning of section 30D;”;(b) in the heading for ““flat”, “landlord” and “tenant”” substitute ““landlord”, “tenant” etc”.”Member’s explanatory statement

This amendment applies the existing provisions on service charges to costs incurred in respect of building safety measures, provides that certain costs may not be taken into account in calculating service charges, makes provision about service charge information, and makes provision consequential on other amendments to this Clause in the name of the Minister.

97: Clause 115, page 121, line 8, leave out “implied terms relating to building safety charges).”” and insert “building safety costs),

section 30DA (liability for remuneration of building safety director of resident management company etc).””Member’s explanatory statement

This amendment is consequential on other amendments to this Clause in the name of the Minister.

98: Clause 115, page 121, line 9, leave out subsections (6) to (8)

Member’s explanatory statement

This amendment is consequential on other amendments to this Clause in the name of the Minister.

99: Clause 115, page 121, line 24, leave out from “of” to end of line 26 and insert “the Commonhold and Leasehold Reform Act 2002 (application to Crown)—

(a) for “30B” substitute “30H”;” Member’s explanatory statement

This amendment is consequential on other amendments to this Clause in the name of the Minister.

Amendments 87 to 99 agreed.

Schedule 8: Building safety charges

Amendment 100

Moved by

100: Schedule 8, leave out Schedule 8

Member’s explanatory statement

This amendment is consequential on the removal of the building safety charge as a separate charge.

Amendment 100 agreed.

Clause 116: Provision of building safety information

Amendments 101 to 113

Moved by

101: Clause 116, page 122, line 4, leave out “, an administration charge or a building safety charge” and insert “or an administration charge”

Member’s explanatory statement

This amendment is consequential on amendments to Clause 115 removing the building safety charge as a separate charge.

102: Clause 116, page 122, line 11, leave out from “service charges” to “from” in line 12 and insert “or administration charges”

Member’s explanatory statement

This amendment is consequential on amendments to Clause 115 removing the building safety charge as a separate charge.

103: Clause 116, page 122, line 12, at end insert “, or

(b) a special measures order (within the meaning of Schedule 7 to the Building Safety Act 2022) is in force.”Member’s explanatory statement

This amendment provides that subsection (2) of inserted section 47A does not apply if a special measures order is in force.

104: Clause 116, page 122, leave out lines 19 and 20

Member’s explanatory statement

This amendment is consequential on amendments to Clause 115 removing the building safety charge as a separate charge.

105: Clause 116, page 122, line 30, leave out “, administration charge or building safety charge” and insert “or administration charge”

Member’s explanatory statement

This amendment is consequential on amendments to Clause 115 removing the building safety charge as a separate charge.

106: Clause 116, page 122, line 35, leave out “, administration charge or building safety charge” and insert “or administration charge”

Member’s explanatory statement

This amendment is consequential on amendments to Clause 115 removing the building safety charge as a separate charge.

107: Clause 116, page 122, line 39, leave out from “service charges” to “from” in line 40 and insert “or administration charges”

Member’s explanatory statement

This amendment is consequential on amendments to Clause 115 removing the building safety charge as a separate charge.

108: Clause 116, page 122, line 40, at end insert “, or

(b) a special measures order (within the meaning of Schedule 7 to the Building Safety Act 2022) is in force.” Member’s explanatory statement

This amendment provides that subsection (2) of inserted section 49A does not apply if a special measures order is in force.

109: Clause 116, page 123, leave out lines 16 to 19

Member’s explanatory statement

This amendment is consequential on the amendments in the name of the Minister leaving out Clauses 82 to 86 (which remove provision about building safety managers).

110: Clause 116, page 123, leave out lines 22 and 23

Member’s explanatory statement

This amendment is consequential on amendments to Clause 115 removing the building safety charge as a separate charge.

111: Clause 116, page 123, leave out lines 24 and 25

Member’s explanatory statement

This amendment is consequential on the amendments in the name of the Minister leaving out Clauses 82 to 86 (which remove provision about building safety managers).

112: Clause 116, page 123, leave out line 28

Member’s explanatory statement

This amendment is consequential on amendments to Clause 115 removing the building safety charge as a separate charge.

113: Clause 116, page 123, leave out lines 29 and 30

Member’s explanatory statement

This amendment is consequential on the amendments in the name of the Minister leaving out Clauses 82 to 86 (which remove provision about building safety managers).

Amendments 101 to 113 agreed.

Clause 118: Interpretation of Part 4

Amendment 114

Moved by

114: Clause 118, page 125, leave out line 32

Member’s explanatory statement

This amendment is consequential on the amendment in the name of the Minister leaving out Clause 82.

Amendment 114 agreed.

Clause 120: Meaning of “relevant building”

Amendment 115

Moved by

115: Clause 120, page 127, line 27, leave out from “dwellings” to end of line 32

Member’s explanatory statement

This amendment extends the cost protections in the Bill to leaseholders in buildings of all heights containing two more residential dwellings.

My Lords, this amendment is leading the charge here. I refer noble Lords to Grand Committee, when the noble Lord, Lord Blencathra, in particular, questioned why only buildings of a certain height benefited from the cost protections in this Bill. This is a matter on which I feel very strongly—and, indeed, both my cosignatories feel strongly—and I give notice that I may well press the amendment to a Division.

I reminded the Grand Committee at the time that building safety is not governed by building height alone or, possibly, at all. I refer to the fire at Worcester Park in September 2019. The Minister went on to give us a graphic description of the circumstances. However, despite that the Minister stuck to his text in suggesting that lower rise buildings do not have the same risk profile. I have probably paraphrased him, and that may not be the precise form of words that he used, but that is the drift of what he was saying. If, as he recounted in the circumstances of the Worcester Park fire, it was so well alight after nine minutes that the fire and rescue services concluded that the building could not be saved, that represents to me an existential risk to occupiers who may be asleep, confused of mind, infirm, pregnant, disabled or otherwise particularly vulnerable, especially as regards the speed with which an inferno can evidently develop.

A block of flats without adequate separating walls to me is just as dangerous above ground-floor level as a high-rise block without decent fire doors. I do not make a distinction in terms of risk; they are both equally perilous, as far as I can see. Be that as it may, I have received emails from occupiers of identical buildings in the same development in the Worcester Park building, telling me that the developer was remarkably reluctant to address basic issues and shortcomings, many of which may have accelerated the fire in the building that was actually destroyed. Furthermore, they said that they could not sell their flats and that insurance had gone through the roof, and interim measures were costing a fortune—exactly the same problems and privations as with taller buildings.

I will just say—other noble Lords will be able to elaborate—that the Government have not made the case for excluding these, other than giving the impression that this is driven, dare I say it, by a degree of Treasury parsimony and a departmental inclination to go no further than it absolutely has to. There seems no good reason for height exclusion on any moral, economic, safety or practical ground. I beg to move.

My Lords, as noble Lords may know, I am not in the habit of making long speeches, but this group of amendments covers a huge range of issues and is arguably the most important group today. I am proposing seven amendments and I have added my name to four others. I will be as brief as I can, and the good news is that I do not propose to intervene in this debate again.

I will go through the amendments in the order in which they appear, starting with Amendment 115, moved by the noble Earl, Lord Lytton, to which I have added my name. It seeks to expand the service charge protection of Schedule 9 to buildings of all heights. At the moment, as we heard, buildings under 11 metres get no help at all from the proposed waterfall. Unless developers agree to fix those buildings voluntarily, or leaseholders are willing to engage in litigation, there is no meaningful help on offer.

As mentioned in earlier debates, buildings under 11 metres can be just as dangerous as buildings over 11 metres. The fire at Richmond House, the 9-metre building that burned to the ground in less than 11 minutes in September 2019, shows the dangers. Buildings under 11 metres are excluded, even though they have exactly the same defects, for which leaseholders bear no responsibility at all. They suffer exactly the same consequences as those in taller buildings: unaffordable service charges, repossession and bankruptcy. I see no equity or principle behind this decision, which is there solely to save money.

When we asked about this in meetings on the Bill, we were told there was no systemic problem with cladding in these buildings—a statement that brings no consolation to leaseholders, such as this one, one of many who have written to me. The letter says:

“I am a leaseholder in a building well under 11 metres. We are three storeys high with 10 flats. We are therefore excluded from any support from the Government, yet our freeholder/managing agent is taking us to court on Friday to ask them to agree to us having to pay for the cost of remediation—a £26,000 service charge in 2022 per leaseholder. We are told the freeholder does not have the means or obligation to pay for these works that we need to reduce the annual insurance premium. We are told that the only way to pay for these works is via the leaseholder and that we will be legally responsible to fund the money and pay it upfront so that the management agent has the means to pay for works.”

The letter continues:

“I hope the Minister will see fit to bring our needs in line with leaseholders in larger properties and protect us from at least some of the costs that we currently face.”

Last week’s Sunday Times had an article showing that, despite what the Government say, buildings under 11 metres remain unsaleable and unmortgageable, as quotes from the major lenders in the article underlined.

We were also told that there were not many such buildings. That is good news, but it follows from that that the extra cost of putting this inequity right is so small that I hope the Minister can accept it.

I should have said at the beginning that I am grateful to Martin Boyd, Liam Spender and Sue Bright, who in their personal capacity have helped me with some briefing.

I turn now to Amendment 117 in my name and those of my noble friend Lord Blencathra and the noble Earl, Lord Lytton. It seeks to expand the service charge protections to enfranchised buildings and buildings where the right to manage has been exercised. This would ensure that all leaseholders are treated equally.

It has been the policy of successive Administrations to encourage leaseholders to enfranchise and buy their freeholds, and to move away from a feudal system of tenure. That process began in the 1960s, when leaseholders could buy their houses, and was extended to flats in the 1990s. Since then, there have been other measures to encourage leaseholders to buy their freeholds, with the security of the independence that goes with it, and measures to promote and enhance right to manage. We are promised legislation in the next Session to take this policy forward.

Against that background, it would be perverse if the legislation before us today put enfranchised leaseholders in a worse position than leaseholders who are not enfranchised, but that is what Clause 120 does. The Government cannot hope to succeed in encouraging more resident-owned and resident-run buildings unless they treat all buildings affected by fire safety issues equally. As I understand the legislation, once your building is “not relevant”, it in effect becomes a second-class building in perpetuity.

I have looked at the government amendments tabled since Committee stage but they seem to make the position worse by confirming that these buildings are excluded. That means that people living in these buildings are being left to fend for themselves, either by undertaking litigation or by recovering what they can from the building safety fund. An excellent article in the recent edition of Inside Housing shows the problem with the fund:

“If the rate of remediation through the fund continues at this pace, it will be decades before all blocks receive funds—never mind see work completed.”

I hope that my noble friend will be able to confirm what he said in Committee, which appears to contradict what is in the Bill. He said:

“My noble friend Lord Young asked the very important question of whether enfranchised properties will have to pay all the costs for remediation. I want to be absolutely clear—read my lips—no, they are not. This will not apply to buildings which have exercised a right to collective enfranchisement, or to commonhold land, which in this case, admittedly, is very few buildings. New subsection (3) in government Amendment 63 is very clear on that point. I am happy to speak to my noble friend afterwards, but I am very clear that they are not expected to shoulder the burden. They are effectively leaseholders that have enfranchised as opposed to freeholders. I hope that helps.”—[Official Report, 28/2/22; col. GC 262.]

However, under Clause 20, these buildings are left to fend for themselves if the developer does not pay or if they do not have the wherewithal to engage in litigation against a well-resourced developer. They miss out on the guarantee in paragraph 8 of Schedule 9 that no leaseholder will have to pay for cladding costs, because they do not live in a relevant building. They are not treated as leaseholders but as freeholders.

My amendment does no more than achieve the ambition set out by the Secretary of State in another place on 10 January, when he said that

“we will protect leaseholders today and fix the system for the future.”—[Official Report, Commons, 10/1/22; col. 286.]

Perhaps my noble friend the Minister can confirm that, if you have not enfranchised, you are protected by the caps on what you can pay but, if you have enfranchised, there is no such protection. I hope that my noble friend will look at that again.

I turn to Amendment 123 in my name and those of my noble friends Lord Blencathra and Lady Neville-Rolfe. This would change the definition of qualifying leases so that buy-to-let landlords with interests in up to five properties, including their main home, benefit from the leaseholder cost protections in Schedule 9. While we welcome the Government’s movement on this, we would like to go a little bit further.

As I mentioned in Committee on 24 February, there are many buildings where flats are owned by buy-to-let landlords. If those landlords cannot pay their share of the bill, it will mean that not all of the money is available to do the works to the whole building and so remediation will not commence, to the disadvantage of all the residents in the block, who will continue to live in unsafe premises. Many landlords hold their buy-to-let properties as part, or in some cases all, of their pension provision. According to data that the Government provided in July 2021 in response to the noble Lord, Lord Carrington, of the 2.2 million buy-to-let landlords paying income tax, 1.5 million—68%—fell within the basic income tax band.

This point is reinforced by the recent report on the remediation and financing of building safety work by the Levelling Up, Housing and Communities Select Committee in another place. It said:

“Buy-to-let landlords are no more to blame than other leaseholders for historic building safety defects, and landing them with potentially unaffordable bills will only slow down or prevent works to make buildings safe.”

It wanted total exemption, but we do not go quite so far. The committee rightly pointed to the kinds of landlord who will be affected:

“We heard from landlords who find themselves outside of the scope of the protections, who invested in properties to support their children, to provide income after being made redundant, to help pay for the costs of caring for relatives, or to provide for their retirement, now facing bills they cannot afford. One contributor told us they had invested in flats using compensation from the Criminal Injuries Compensation Authority ‘after the murder of my husband in the 7/7 atrocity’ and now faces ‘vast bills’”.

Our amendment would align the provisions of the Bill more closely with the Bank of England’s definition of a portfolio landlord as being one with four or more mortgaged buy-to-let properties across all lenders in aggregate. It would also ensure that most private landlords who are leaseholders would be covered by the Bill. The Government’s most recent English private landlords survey shows that 83% of private landlords rent out between one and four properties.

I understand that the Minister has indicated to the National Residential Landlords Association that he might be open to considering a formula which would enable landlords to access support under the government scheme where their portfolio of properties is valued at a certain amount, instead of simply counting how many there are. There are huge variations in the value of property for a multitude of reasons. For example, someone who has 10 other properties may have significantly less means than someone who only owns one property. Yet the government approach will penalise the individual with less means purely because of the number of properties their own. Some buy-to-let owners may have significant equity in their properties while others may be mortgaged to the hilt or in negative equity. The current approach is very crude and does not differentiate between the wealth of those affected, so I wonder whether the Government are considering that option.

I move to Amendment 126, which is a technical amendment. At the moment it is not quite clear whether the protections being given to leaseholders can be sold on to future buyers. It is important that that should be possible, in order to get the market moving again. Clause 121 defines a “qualifying lease” as one held by “a relevant tenant”. A relevant tenant must on 14 February this year meet the occupation and property ownership provisions set out in Clause 121. The Government say that this clause allows protection to be passed from someone who qualifies on 14 February to a future buyer, but I am not sure that that is the case because the restrictions the Government are imposing on who can benefit from help, such as those owning more than four buy-to-let properties, depend on the same definition of relevant tenant.

If the Government’s view of Clause 121 is correct and the existing wording allows leases with protection to be sold on, the Government may have made a drafting error. If the lease can be sold and the protections passed to a buyer, the characteristics of the buyer are irrelevant. If so, it means someone with 10 flats—six more than the four allowed—could come in, buy up a lease and still get protection. I do not think that is what the Government intend. It is important that we get the market moving, but also that we do not give opportunistic cash buyers the chance to buy up these leases and benefit from protections that other buy-to-let landlords will not get.

Amendment 153, which amends government Amendment 152, is technical. Given the passage of time and the fact my notes are in very small print, I think I will pass over that.

I turn now to Amendments 157 to 160 and 163, which are really important. They deal with the amount leaseholders have to pay for non-cladding costs. On this, my preference is for Amendments 155 and 156, which mean zero liability; the leaseholder pays nothing. The Government say these caps are necessary because of legal advice. The claim is that to impose measures on developers and landlords, it is necessary for leaseholders to contribute in some cases.

As with all legal matters, there appears to be a diversity of opinion among professional lawyers on the Government's judgment that Article 1, Protocol 1 requires leaseholders to contribute anything. But if my noble friend the Minister advises your Lordships that those two amendments—the ones with zero cost—mean that he can no longer assert that the legislation is compatible with the ECHR, then Amendments 157 to 160 come into play and limit the liability. My noble friend Lord Blencathra will speak to Amendment 158.

Let me remind the Minister what he told noble Lords in his letter dated 20 January, entitled “Introduction of the Building Safety Bill”:

“The Secretary of State … announced that leaseholders living in their homes should be protected from the costs of remediating historic building … defects.”

The Government’s proposals require leaseholders in properties worth more than £175,000 and up to £1 million outside London to pay £10,000 towards non-cladding remedial works, if the money cannot be found from developers or landlords. In London, leaseholders in properties worth more than £325,000 and up to £1 million may have to pay £15,000, again if the money cannot be found from developers or landlords. Higher caps of £50,000 and £100,000 apply inside and outside London for properties worth more than £1 million or £2 million.

What is not in doubt is that £10,000 and £15,000 are material amounts of money for most people in this country. Even if the payments are spread over 10 years, as the Government propose, £15,000 works out at £125 per month. That extra monthly outlay may be the difference between someone getting a mortgage or not. It is widely acknowledged that people are facing a cost-of-living crisis, rising inflation, rising fuel prices and the rest. Is it wise to impose a further burden of £125 per month on stretched household budgets? Alternatively, as the amendments in my noble friend’s name and mine propose, should the cap be lowered, particularly when the leaseholders are not responsible for the defects?

Amendment 157, in my name and that of my noble friend Lord Blencathra, asks the Government to consider an alternative to the caps. Every leaseholder would then pay the same 1% of the value. That approach would avoid, for example, someone in a modest studio apartment worth £175,000 in Manchester paying as much as someone with a three-bedroom penthouse, and potentially in the same building. The percentage-based approach would avoid the huge cliff edges in the Government’s proposals. For example, someone with a flat worth £174,999 in Leeds pays nothing, while someone next door with a flat worth £176,000 must pay £10,000. I hope that, if the Government insist that zero liability is in contravention of the ECHR, they will consider these alternatives.

Finally, and briefly, Amendment 165 proposes that the value for all purposes in the Bill is the last sale price. The Government have not made clear how they intend to assess the value of properties bought before 2022, as most will have been. There is a risk that, where a property is valued by adding inflation, this may produce a value which cannot actually be achieved on the open market. In cases where leaseholders live in a property which is worth less than they paid for it, this inflation-linked approach may lead to leaseholders being penalised twice over: once in the value lost, and again when they have to pay a capped contribution based on a value imputed by law which has no basis in reality. This amendment avoids the risk.

I am picking up the page with very small print because it raises a very important issue: leaseholders being exempt from paying a service charge for remediation if the landlord’s “net worth” is “more than” £2 million. If a freeholder must remediate a building and the building costs are substantial and the whole cost falls on him, I wonder how the Minister is going to value that building. It may have negative value because of the liability which goes with it to pay the full cost of remediation. Also, it is not absolutely clear from the Government’s amendment, in working out the £2 million value, whether it is based on the property or associated persons. For example, individual directors of the company which owns the freehold could also be caught in, as it were, the means test.

I am conscious that I have taken up a lot of time and raised a lot of issues. I hope that the Minister is able to give a sympathetic reply. I feel particularly strongly about the enfranchised freeholders who I do not believe get the right protection, and I feel very strongly about my noble friend’s amendment on height. I also feel quite strongly about the current cap on leaseholders which is too high.

My Lords, I will speak to Amendments 260 and 126. I apologise for not being here this morning. I am grateful to the noble Lord, Lord Blencathra, for speaking to our amendments.

Amendment 260 enfranchises leaseholders and brings them closer to the decision-making processes of their building. It ensures that residents of the building are made aware, within the earliest reasonable timeframe, by the responsible person, when they are served any notice given by the fire and rescue service. It also ensures that, when in complying with the notice the responsible person passes costs on to residents, the residents will have 21 days after being informed to appeal this notice to the court.

The essence of this amendment touches upon the freeholder’s incentives, as there is no incentive for the freeholder to challenge a notice from the fire service requiring remedial work, since ultimately it is the tenants or the leaseholders who will shoulder these costs. The reality is that freeholders often do not have skin in the game and are more than happy to comply with a served notice, with the full knowledge that they will not be the ones incurring costs for complying with the notice. This amendment is not handing leaseholders the power to indefinitely hold up works necessary for the safety of the building. It is simply providing them, as the ones with real skin in the game, with the right of appeal.

I recognise that allowing any individual tenant the right of appeal is messy and may lead to a flurry of unnecessary appeals, which in turn could create unnecessary work when it is least needed. Nevertheless, in principle, leaseholders deserve enfranchisement and mechanisms to challenge decisions that are simply imposed on them. Appeals being done through a representative body—a recognised tenants association, for example—would represent a more sensible position, as that would prevent rogue leaseholders going against the majority to appeal decisions, while at the same time allowing appeals to occur through a body that is both representative and accountable to the leaseholder, and which retains regular communication with the responsible person.

I now turn to Amendment 124, in my name and that of the noble Lord, Lord Blencathra. The definition of a qualifying lease and its implications are concerning, as the noble Lord, Lord Young, has pointed out. I am pleased that the Government have extended this definition to three dwellings in total, but it is still problematic. The protections under the waterfall system in Schedule 9 are only available for qualifying leases. Technically, an individual who owns three flats valued at £900,000 per dwelling would meet the cap of £15,000 for remedial costs, whereas an individual with five investment properties in the north of England valued at £200,000 per dwelling would be offered no protection and be liable for the entire remedial costs for each dwelling.

Is this not the sort of regionalism that the Government want to avoid in their levelling-up policy? Under the Government’s scheme, the individual, up in the north, for example, whose total property holdings are valued at £1 million, is required to pay for all their remedial costs, whereas their equivalent in London, with total property holdings of £2.7 million, would have their costs capped at £15,000. This example is to make the point that simplistically saying a number, whether it be one, two, four, whatever, for the number of leases allowed under the definition of a qualifying lease, says very little about the value of those apartments. It is evidently unfair that an individual with a much lower portfolio in value might incur much higher costs.

I accept the reality that, under any scheme, there will be winners and losers. However, I wonder whether the Government need to go back to the drawing board on how they determine whether a private landlord qualifies under the definition of a qualifying lease, as it is almost entirely void of context. It would be much wiser to determine the definition of a qualifying lease for private landlords based on the value of their entire property portfolio, rather than simply on the number of leases that they own.

This point about context brings us to the crux of what Amendment 124 would do, which is to provide some level of security to those receiving a state pension. Young landlords who may fail to qualify under the definition at least have the ability and the time to incorporate this setback into their retirement plans. It does not make it any less painful, but it would at least be a more manageable state of affairs for which they might be able to plan accordingly over many years if they have that time ahead in which to work. Furthermore, it would be assumed that many private landlords would be in receipt of an active income, probably a reasonable income, if they were able to afford multiple leases and not be classed as a qualifying lease. Regardless of whether this means that their exclusion is fair, at the very minimum they have the possibility of greater future earnings. The hope is that those individuals may at least be able to weather these costs in the long run and secure for themselves the financial future they want in retirement.

However, pensioners do not have this luxury. Beyond their state and work pensions, savings and any income they get from renting out properties or other dividends, there is almost a negligible prospect of them finding additional ways to raise money. The whole point of planning for your pension is the knowledge that whatever you have in your possession at the point of retirement is what you will be required to live on for the rest of your life. What concerns me is the notion that, as a result of this definition of a qualifying lease, some pensioners who have worked their entire lives and saved and invested diligently so they can enjoy their retirement without financial worry will be suddenly forced to raise enormous amounts of capital to fund remedial works. How does one expect a pensioner to raise such funds? I hope that my concerns are not well founded, but I fear that unless the definition of a qualifying lease makes reference to those on pensions, retirees may find their entire financial life’s work in tatters.

I am not a fan of the simplistic way in which the Government are deciding which private landlords do or do not qualify under the definition. However, if I am forced to work within this framework, I think that the provisions contained within Amendment 124, in ensuring that pensioners who own up to six leases in total also fall under the definition of a qualifying lease, are fair ones that protect those who will find it exceedingly difficult to adjust financially to the bills that may come their way.

In this vein, I also support the provisions contained in Amendment 123, extending that number of leases up to five. However, I believe even this is a sticking plaster, for the reasons that I have just outlined, as it says nothing about the value of an individual’s property portfolio.

I really hope that the Government will be able to do something more on this and, at a minimum, offer some assurances to those pensioners affected that they will not see their life’s financial planning reduced to ruin. More comprehensively, I hope that between now and Third Reading the Government will look at this definition of a qualifying lease for private landlords and how in reality it is to the benefit of private landlords with a few but highly expensive leasehold properties.

I am pleased to see Amendments 165 and 165A and their attempt to address the question of how a flat will be valued under the definition of a qualifying lease. However, I express a degree of concern about Amendment 165, as there are leaseholders I have met, not necessarily very wealthy, who purchased a leasehold flat for marginally over £1 million in London only to find that, as a result of requirements to undertake remedial works, the value has dramatically dropped and is now far less than the purchase price. Valuing their flats at the purchase price would likely mean that many leasehold flats which have lost significant value were brought into a cap which no longer reflected their current value. For this reason, I welcome Amendment 165A, as it would force the Government to consider issues surrounding negative equity when drawing up their mechanism to value these leases. I know that the Minister gave some reassuring comments during a meeting we had and hope that he might expand on them today so that leaseholders can be reassured that their leases will be fairly valued.

Finally, I support all those amendments in this group seeking to reduce the costs that can be passed on to leaseholders, along with Amendment 115, which would extend the cost protection to leaseholders in buildings of all heights. Taken together, these amendments could provide a package of measures that would deliver justice to those unfairly caught up in this scandal.

My Lords, I was a little slow in rising to introduce the government amendments. I was, perhaps, a little punch drunk after the length of the debate today.

It is only right, and I am sure we all agree, that building owners and landlords should share in the cost of fixing dangerous buildings. We have carefully engineered this Bill to ensure that those responsible, and otherwise those with the broadest shoulders, will be the first who are required to pay. Where there is no party that clearly should pay in full, and only in this scenario, our approach spreads the costs fairly and equitably and, above all, ensures that the most vulnerable leaseholders are protected. These measures are a robust and unprecedented legislative intervention, reversing the existing legal presumption that leaseholders must bear the costs of historical building safety defects.

The Government have listened to the comments raised by noble Lords, and we have tabled amendments which go even further in protecting leaseholders. Before I set out the detail of these further protections, I would like to be clear that the protections we are putting in place are extensive and, as noble Lords will be well aware, that these must remain in balance with the demands placed on landlords and building owners in ensuring that building safety defects are fixed and paid for where no wrongdoing on their part has taken place. There is an element of fairness here that we need to deliver. The Bill changes the private contract between the landlord and the leaseholder by stating that leaseholders will not pay any costs except in certain circumstances. Government can do this if it is in the general interest to do so, provided there is a fair balance between all the parties. Therefore, we need to make sure that the Bill is both proportionate and fair to all parties.

As I have said, leaseholders need to be protected, and we have brought in the most wide-ranging and expansive set of protections ever seen, allowing the courts to look through to associated companies to find both who is responsible and who has funds to remediate properties as there is no point in having money while properties remain unsafe. However, we are also aware that not all landlords were involved with the developer or have deep pockets, and we need to make sure that we consider the issue of building safety from all sides. We have therefore legislated on the side of the landlords by providing numerous robust routes for recovery of funds from those truly responsible: developers and the manufacturers of defective construction products.

To be clear, and bearing in mind my noble friends’ proposed amendments, let me put their minds at rest. The Bill makes it very clear that leaseholders will not pay anything in the majority of cases. These are where the landlord is the developer or is linked to the developer, where the landlord is wealthy and, finally, where the leaseholder’s property is valued at less than £325,000 inside London and £175,000 outside.

Where these absolute protections do not apply, the leaseholder’s contributions will be heavily capped. On leaseholder contribution caps, it is important to bear in mind that these caps are a maximum that leaseholders can be charged, not a target, and that, as above, they apply only where the landlord is not linked to the developer and cannot afford to pay in full. In addition, costs paid out in the past five years, including for interim costs such as waking watches, will count against the caps. Overall, we consider that in most cases leaseholders will not have to pay the full capped amount and many will pay nothing at all. Nevertheless, the Government agree it is critical that those leaseholders who are least likely to be able to afford to contribute towards historical remediation costs receive the greatest protection. That is why we have tabled amendments to provide that any qualifying lease with a value below £175,000, or £325,000 in Greater London, will be protected from all costs relating to non-cladding defects and interim measures. This is in addition to the protections for cladding remediation costs, which apply to all qualifying leases, and to all leases in buildings owned by or connected to developers.

Amendment 164 sets out that the value of a qualifying lease at the qualifying time is to be determined by the most recent sale price on the open market, prior to 14 February this year, uprated in accordance with the UK House Price Index published by the Office for National Statistics. Uprating values for this purpose will be set out in legislation.

Amendments 118 and 119 expand the definition of “enfranchised buildings” to ensure that all types of enfranchised buildings are covered.

We have listened very carefully to concerns about leaseholder affordability in the small number of cases where leaseholders are paying up to the caps. That is why we have tabled Amendment 166, to double the repayment period from five to 10 years. For leaseholders whose property is not below the threshold and whose building owner or landlord is not liable for the full remediation costs, Amendment 166 will mean that with regard to the capped costs the monthly repayments will be halved.

We have also listened carefully to those who were worried about buy-to-let investors who may be holding leasehold properties instead of a pension. As a result, we have amended Clause 121 to provide that people owning up to three UK properties qualify for the protections. As before, the principal home will always qualify, irrespective of how many additional properties are owned.

As well as going further to protect leaseholders, we have tabled a number of amendments which add key detail to the measures. We are clear that developers must fix the buildings they developed. That is why we have tabled Amendments 141 to 143 to Schedule 9, which clearly state that, where the landlord is or is linked to the developer, they will not be able to pass costs on to any leaseholder. This includes non-qualifying leaseholders such as commercial leaseholders and those with more than three UK properties. We have also tabled Amendment 145, which extends the definition of a developer to include persons who were in a joint venture with the developer. If you commissioned the work, you will also count as the developer.

We have also tabled Amendment 152, which will amend Schedule 9 to provide that where the landlord meets the contribution condition—defined as having a total net worth of more than £2 million per in-scope building as of 14 February 2022—they will not be able to pass any costs on to qualifying leaseholders. The calculation for net worth will be set out in regulations and will take into account parent and associated companies. This will ensure that those who have used complex corporate structures, such as special purpose vehicles, cannot evade liability where they can afford to meet the costs of remediation.

We are also amending Clauses 120 and 122 on the definitions for relevant buildings, landlords and works. These amendments will extend provisions to include work undertaken to remedy a defect and will clarify that buildings that are leaseholder-owned are out of scope because, in such buildings, the leaseholders are effectively the freeholders as well. With Amendment 121, we set out how the height of an in-scope building and its number of storeys will be calculated.

Amendments to Clauses 122 and 136 cover further definitions, including clarifying that associated partnerships are included, as the noble Earl, Lord Lytton, raised in Committee. Amendment 169 to Schedule 9 inserts a new definition of cladding remediation, which now means the removal or replacement of any part of a cladding system that forms the outer wall of an external wall system and is unsafe.

Amendments 170 and 171 provide that the landlord cannot pass on costs to a qualifying leaseholder relating to professional services, in addition to legal costs. Amendment 177 provides that certain leases are taken to be qualifying leases without the tenant providing a certificate, unless steps are taken. It also provides that landlords are taken to have met the contribution condition unless they provide a certificate proving otherwise. This means that the legal burden will be on the landlord to prove that they are entitled to pass on capped remediation costs.

The amendments also make minor technical and consequential amendments to clauses to ensure the provisions work as intended, remove extraneous powers and commence the provisions two months after Royal Assent.

It is right that leaseholders be protected from extortionate costs of remediating historical building safety defects, in a manner that balances the demands placed on landlords and building owners, where no wrongdoing on their part has taken place. I ask your Lordships to welcome and support this significant and important set of amendments, which go further to protect leaseholders and provide that fair balance.

My Lords, this is probably the most important group of amendments we are considering today, because it is absolutely at the heart of the building safety scandal that started nearly five years ago with the loss of 72 people in the Grenfell fire. I always think it is worth remembering that: 72 people died and the lives of many families were changed for ever, and that happened because of systemic and long-term failures in the construction industry.

It is also worth remembering that leaseholders since that time have found themselves under the enormous pressure of anxiety when they receive invoices, maybe for £100,000 or more. Some of them have not been able to cope with that level of anxiety, thinking that nothing would change, and have chosen bankruptcy as a consequence and therefore lost everything they had saved and worked for. For some whom I have heard about, sadly, this pressure may have contributed to something even worse: in the face of the bills and a long dark tunnel with no solution, they ended their lives. That is the backdrop. That is the tragic impact this has had on individuals across the country, and which has brought us to this place. This set of amendments is at the heart of those concerns.

I first raised my worries about leaseholders being liable for all the costs of cladding, removal and remediation of all the fire safety defects when the Fire Safety Bill was first debated in 2020. Unfortunately, I did not succeed in amending it at that stage, but what has happened since has been remarkable—the number of people on all sides of the House who have taken up the cudgels to argue the case, rightly, for justice for leaseholders. I give enormous credit to the cladding campaigners from all groups and different cities around the country who have got together and done the investigation, found the facts and put the case to the Government, who, to their credit, have listened and made the changes we have seen today. I think there are over 200 government amendments to the Bill today.

The question of justice for leaseholders is still at the heart of the Bill, and I contend that the Government still have not gone far enough in fulfilling what the Secretary of State and the Minister have said: that they should not pay a penny. They have done everything right and nothing wrong. They should not pay anything towards this remediation, because the flammable cladding, sometimes knowingly, was put on buildings, as was exposed in the Grenfell inquiry. Shoddy construction, sometimes deliberate, to cut corners and save costs, has also been exposed during the Grenfell inquiry.

I want to speak to Amendment 156 in my name and that of my noble friend Lord Stunell, but also to Amendment 155 in the name of the noble Baroness, Lady Hayman, and to Amendments 158 and 159 in the names of the noble Lords, Lord Young of Cookham and Lord Blencathra, and the noble Baroness, Lady Hayman, to which I have added my name. They focus on trying to solve the problem of justice for leaseholders, who should not pay a penny.

Unfortunately, the Minister has said today that “the majority” will not pay. Well, if the majority will not pay, the minority will—and the minority should not, because none of this is of their making. My Amendment 156 seeks to establish that what the leaseholder should pay is a peppercorn—a grand, historical way of saying zero, zilch. I thank the noble Lord, Lord Young of Cookham, for his support for Amendment 155 in the name of the noble Baroness, Lady Hayman, which uses the word “zero”. I use “peppercorn”, but they get to the same place, and he has acknowledged the justice of this case.

What the Government are saying, when we met civil servants to help us understand the Government’s position in the light of the amendments that they have tabled, is that they had this cap for those properties above £325,000 in London and £175,000 outside London in order to comply with an interpretation of the European Court of Human Rights, Article 1, Protocol 1 —see what you learn when you get involved in Bills? They said that there has to be a fair balance between the property rights of freeholders, or whatever, and the leaseholders, and therefore that there has to be some payment.

I, of course, always ask the question, so I turned to my noble friend Lord Marks, who has spent a lot of time talking to government lawyers, looking at the evidence and coming to his conclusions. I hope the House will extend the right to my noble friend to explain the interpretation of that element of the ECHR that has resulted in the Government’s position, because, if the Government will accept the exposition of the ECHR A1P1, they might accept Amendments 155 or 156, that leaseholders should pay nothing. That would be a huge tribute to all those across this House who have worked in different ways to achieve that end. I urge the Government to listen to the legal advice—dare I call it advice? No, I dare not; the legal whatever—to show that we can accept that. As noble Lords know, because I have been saying it for two years now, I feel very strongly that, as a matter of justice—plain, simple justice—that leaseholder should not pay anything.

If the noble Baroness, Lady Hayman, moves her Amendment 155, which comes before ours, we will undoubtedly support it, because it achieves what I want to achieve, and I have tried for two years-plus now to get there. If that amendment is not pressed to a vote or is disagreed, obviously we will press ours to a vote. But if those fail to get the support of the House, I will support Amendments 158 and 159, which try to move the barrier of justice closer to zero by halving the cap. Let us do it. They deserve justice from us, if we can get there—and why would we not support that?

There are lots of other amendments in this group but, for me, at the heart of it is the principle. I hope we will now hear from the noble Lord, Lord Marks—if the noble Lord, Lord Blencathra, will permit that—so that he can explain why we think that Amendments 155 or 156 are permissible according to the ECHR.

My Lords, it is a great pleasure, especially after that introduction, to follow my noble friend Lady Pinnock. I should say that I have not spoken before on this Bill, and I apologise for coming in only at this stage. I want to contribute on just one aspect of the amendments in this group: the legal advice that the Government have apparently found persuasive, referred to by the noble Lord, Lord Young of Cookham, and by my noble friend Lady Pinnock.

Noble Lords have heard that Amendments 155 and 156—and, to a lesser extent, 158 and 159—would significantly limit the permitted maximum payable by leaseholders under paragraphs 5 and 6 of Schedule 9 below the caps contended for by the Government, so that leaseholders would pay nothing, or only a small amount, towards remediation costs. The Government have asserted that, if those amendments were passed, the legislation would probably breach a freeholder’s right to the peaceful enjoyment of their property under Article 1 of Protocol 1 of the ECHR. I also understand that the Government are therefore concerned that that would mean the Minister could not make a statement of compatibility in conformity with Section 19 of the Human Rights Act.

I do not accept that analysis, and I will say briefly why—and I hope I will be forgiven for quoting the relevant part. It is right that the article provides, in paragraph 1:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.”

But paragraph 2 goes on to say:

“The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

I am relatively confident that this is not a straightforward deprivation case in the first paragraph, because there is no expropriation of the freeholder’s property, in fact or in law. My understanding is that the Government agree with this, although they say that the Strasbourg case law is not clear on the point. On that, I disagree. My reading of the cases on this issue is that they are indeed relatively clear, and that any argument that this is a full deprivation case is unsustainable. But much more difficult is the question of whether this is a case of the Government controlling the freeholder’s use of their property, in such a way as to amount to a breach of the article by imposing effectively the entire remediation costs on those freeholders.

On the initial point as to whether or not this would be a control of use, I think the Government’s advice would be right, but that is not the end of the story. Once control of use is established, then the test is whether the conditions for its lawfulness in paragraph 2 of the article are met by the state. The test for a court, domestically or in Strasbourg, would be threefold. First, does the control of use serve the public interest? Secondly, does it comply with the conditions prescribed by law? Thirdly, does it pass what is sometimes called the fair balance test—that is, does is strike a fair balance between competing interests, and/or is it a proportionate response?

Generally, the European Court of Human Rights will interfere only if the state’s control of use has been arbitrary or manifestly unreasonable. In my view, freeholders would face a difficult uphill battle to persuade a court that a requirement that they meet full remediation costs, pursuant to primary legislation for a clearly public-interest aim—that the fire safety of buildings should be paid for by the freeholder, not my blameless leaseholders—conflicted with the principle of lawfulness or failed to meet the legitimate aim requirement.

Significantly in this context, the protection of the environment—which is, I suggest, analogous to the safety of residential property—has been clearly marked out in cases as a legitimate public interest, as have housing regulations involving rent control and protected tenancies.

The freeholders would have to rely on what is essentially a backstop argument: that these provisions, as amended—if they are—fail to strike a fair balance between their interests in their enjoyment of their property and the interests of the state in achieving a legitimate public policy aim. To rebut such an argument the state would have to show only that the law, as enacted, avoids arbitrariness, that it is foreseeable in its application, and that it strikes a balance between the public interest in protecting blameless leaseholders from heavy charges and the private right of commercial freeholders to enjoy their property. It would be difficult to argue that this legislation, even with any of the proposed amendments, failed to meet the fair balance test.

Nor is it, in my view, central to this argument that there should be a contribution of a particular amount or of a capped amount. For my part, I doubt that the European Court of Human Rights would find that the argument turned on the amount of any contribution by leaseholders. In this I disagree with the Government’s assessment. Indeed, it could be argued that the Government would be more, rather than less, vulnerable to an accusation of arbitrariness if they picked on a particular figure as a defensible cap, rather than legislated for nil contributions from leaseholders.

I am greatly fortified in my overall view by the fact that the margin of appreciation, as it is known, for states in the application of the fair balance test is very wide. I will omit the references that it makes to a number of decided cases, but the European Court of Human Right’s guide on this article, at paragraph 134, I think, says that

“the margin of appreciation available to the legislature in implementing social and economic policies will be a wide one and the Court will respect the legislature’s judgment as to what is ‘in the public interest’ unless that judgment be manifestly without reasonable foundation … Furthermore, the notion of ‘public interest’ is necessarily extensive … The Court normally shows deference to the Contracting States’ arguments that interference under its examination was in the public interest and the intensity of its review”

—the court’s review—

“in this regard is low.”

It follows that I do not believe that a Minister could not properly and conscientiously make a statement under Section 19 of the Human Rights Act that, to use the words of Section 19,

“in his view the provisions of the Bill are compatible with the Convention rights”.

The Minister does not have to be certain; a 51% chance of success in resisting a challenge is sufficient. In my view, that standard is met.

Of course, we sympathise with the Government’s concern that if the burden of remediation costs falls largely or wholly upon them, freeholders may well challenge this legislation, directly or by resisting enforcement. Such challenges may cause delays. In commercial life there is little or nothing anyone can do to stop aggrieved parties litigating, so freeholders or developers may litigate in the UK or at the European Court of Human Rights. However, I am not at all clear that the amendments we are debating will make any difference at all to the decisions that freeholders and developers may make to challenge this legislation in the courts, domestically or internationally, or that their chances of success if they do would be affected. My clear expectation is that, ultimately, the Government would defeat such a challenge, whether or not these amendments succeed. I therefore support my noble friend Lady Pinnock, the noble Lord, Lord Young, and others, in pressing these amendments.

My Lords, I have not spoken in these debates either. I hope, like the noble Lord, Lord Marks, I might be forgiven for intervening very briefly.

I took the opportunity of looking at Article 1 of Protocol 1 shortly before coming into the Chamber today, and at some of the background authorities to which the noble Lord has referred. I agree entirely with his carefully worded speech in every respect. There is, of course, a question of balance and a question of the margin of appreciation and the other technical phrases that he has used, with which I am very familiar, but I think his assessment of all these points is absolutely right. The prospects of a successful challenge really are very remote, and the Government would succeed. I agree with his assessment, and I hope this might be of some comfort to the noble Baroness, Lady Pinnock, in her amendment, and to the noble Lord, Lord Blencathra.

My Lords, it is a privilege to speak after hearing from two such knowledgeable noble Lords. I am tempted to say: let us cut to the chase and go straight to the vote on Amendment 115 and get it over with.

In the meantime, I would like to speak on Amendment 115, which I strongly support, and Amendment 123. I would like to comment on Amendments 155, 156 and 157, and to my Amendments 158, 159 and 163. Before doing that, although I will not speak to them, I was privileged to support Amendment 117 on enfranchising leaseholders, Amendment 124, moved by the right reverend Prelate the Bishop of St Albans, on pensioners, and Amendment 153, moved by my noble friend Lord Young of Cookham.

On Amendment 115, concerned with buildings under 11 metres, I strongly support what is proposed by the noble Earl, Lord Lytton. I hope he presses it to a vote unless my noble friend is willing to accept it. I have heard my noble friend the Minister say repeatedly—and he is largely right—that a building of under 11 metres may be less dangerous than a building of 20 or 30 storeys. I accept that even I could get out of a building of three storeys a bit faster than I could get out of one of 13 or 30 storeys. The risk is lower, but there is still a risk—that is one of the main points: there is still a risk. When we saw Richmond House burn down in nine or 10 minutes, it was horrifying. I hope that, if I was in there and woke up in time, I would have got out, but there might be some disabled people who could not have done so.

There is also an issue of principle. If someone has built a building, whether it is 1 metre high or 11 metres high, and used flammable materials or the wrong materials, they should be made to fix it, no matter how wealthy they are—if it is Abramovich or anyone else. If the building has flawed materials, it should be repaired, irrespective of the height. I appreciate that my noble friend has gone a long way on this and that he has been very kind in telling us at countless meetings that there is a lower risk in those buildings, but there is still a risk. Of course, he also said that the numbers were very small: in that case, if the numbers are very small, it is a small problem to fix.

Let us do it—that is a slogan for the next election for the noble Baroness. If the numbers are small, it is a small thing to fix.

Moving on to Amendment 123, again I support my noble friend Lord Young of Cookham in changing the definition of “qualifying lease” so that buy-to-let landlords with an interest in up to five properties, including their main home, benefit from the leaseholder cost protections in Schedule 9. As my noble friend said, this is important because there are many buildings where there are a lot of little flats owned by buy-to-let landlords. If those landlords cannot pay their share of the bill, it will mean that not all the money is available to do the work for the whole building. Similar issues may arise when landlords own flats in multiple different affected buildings that have received help from the building safety fund.

I appreciate that many of those landlords hold their buy-to-let properties as part of or, in some cases, all their pension provision. We have all had many emails from people in the past few days setting out some rather sad examples. I know my noble friend has increased the protection from two by-to-lets to four, but I do not think that goes far enough and we suggest that the overall figure should be five, but even then it omits many small landlords. I know it is not good law to quote hard cases, but I have an example of just one of dozens one has received in the past few weeks.

This person says, “I am 57 and have worked as an electrical contractor most of my life. I now have nine small rental apartments in Salford, valued at £80,000 to £100,000 each, a total of approximately £800,000 before they were valued at £0 since the cladding crisis. These properties were purchased in 2007-08 with years of savings and dropped 40% in value due to the financial crash of 2009 caused by the banks, which were bailed out, so my properties are still in negative equity. My nine apartments in the same building are all subject to safety issues, and my total service charges for 2022 are approximately £250,000 for the external wall system only, and this quote is from last year. The managing agents are in the process of getting updated quotes, which will be much higher. This does not include firebreaks, compartmentalisation, fire doors, et cetera, so my total costs are likely to be over £300,000 on property valued at £800,000. Having nine rental apartments seems to deem me to be a large-scale landlord not worthy of protecting from these costs, whereas someone with one or two rental properties in London worth a similar value to my nine little flats will be protected under the latest proposals.” He concludes, “The developer of the building has not replied to any letters from our managing agent or us leaseholders and has been trying to close the company for months, which we have objected to. The company has not traded for six years and there are zero funds in the accounts.”

That is a good example of why these amendments are necessary. It is not just the numbers, as the right reverend Prelate said, it has to be the overall value, and that is why I support my noble friend Lord Young’s amendment on having a percentage figure. If we cannot have zero or peppercorn, then 1% seems a fairer way of going about it.

On my Amendments 158, 159 and 163, the Government’s proposals require leaseholders in properties worth more than £175,000 and up to £1 million outside London to pay £10,000 towards non-cladding remedial works if money cannot be found from developers or landlords. In London leaseholders in properties worth more than £325,000 and up to £1 million may have to pay up to £15,000. Again, that is if money cannot be found from developers or landlords. Higher caps of £50,000 and £100,000 apply inside and outside London for properties worth more than £1 million or £2 million. The Government say that these caps are necessary, again because of legal advice which we have just heard rebutted and on which I shall comment in a moment. The claim is that in order to impose measures on developers and landlords it is necessary for leaseholders to contribute in some cases or we fall foul of the ECHR.

Amendment 158 in my name, also supported by my noble friend Lord Young of Cookham and the noble Baronesses, Lady Hayman of Ullock and Lady Pinnock, simply says

“leave out ‘£15,000’ and insert ‘£7,500’”,

halving the figure. For buildings in London, the amendment halves the contribution of leaseholders to non-cladding costs. Similarly, Amendment 159, for buildings outside London, reduces it from £10,000 to £5,000, halving the contribution of leaseholders on non-cladding costs; again, supported by my noble friend Lord Young of Cookham and the noble Baronesses, Lady Hayman of Ullock and Lady Pinnock. Finally, Amendment 163, again supported by my noble friend Lord Young of Cookham, says,

“leave out ‘£50,000’ and insert ‘£15,000’”.

That applies to the properties inside and outside London worth between £1 million and £2 million. The amendment would reduce the leaseholder contribution to non-cladding costs from £50,000 to £15,000.

All told, as we come to the end of this debate, the Government have been given four options by the various amendments. There is the zero option, proposed by the noble Baroness, Lady Hayman of Ullock; the peppercorn option, proposed by the noble Baroness, Lady Pinnock; the 1% option proposed by my noble friend Lord Young of Cookham; or they can lower the cap, as in the amendments that I have just described. We have done all those amendments on lowering the cap in the hope that we could get around the Government’s view that the ECHR would put a block on this and that they would have to say that the Bill, or Act, was not compliant with the ECHR. But we have just heard from two eminent and learned noble Lords and an ex-Supreme Court judge that none of these amendments would be in breach of the ECHR. As the noble Lord, Lord Marks of Henley-on-Thames, pointed out, even if we do not accept of these amendments and stick with the government ones, there will be some freeholders, landlords and developers who will still go to the ECHR and complain about anything to slow it down. So sticking with the Government’s level does not get us out of litigation in the European court.

I look forward to what my noble friend has to say on this. The legal arguments produced by the noble and learned Lords are very telling. I commend my amendments to the House, and also commend those from the noble Earl, Lord Lytton.

It is a great pleasure to follow the noble Lord, Lord Blencathra. In relation to Amendment 115, the noble Lord discussed the 11-metre question. The emphasis is often on whether there is less risk in safety terms under or over 11 metres. For me, that slightly misses the point—which is that, regardless of whether you have resolved that, the problem is that freeholders are still charging and doing remediation work on buildings under 11 metres. Therefore, there are costs that those people who live in buildings under 11 metres have to pick up. The lecture that it is less risky over 11 metres really needs to be given to the freeholders not, necessarily, to the leaseholders—but that does not really help us, I think.

More generally, this is such an important group of amendments. The noble Baroness, Lady Pinnock, passionately reminded us of the context. It is true that being a leaseholder today is no longer just a description—it has almost become a full-time job in terms of fending off more and more financial demands and getting on top of the law. If you go and meet a group of leaseholders, they are having the kind of discussion about the ECHR that we have just heard from noble Lords, because they are trying to get on top of all these details and technicalities. It has become an overriding source of worry and anxiety, and genuinely—rather than just being about the status of home ownership—it has become a hellish state of affairs. So they need anything that can resolve that, and that is why this Bill is so important and this group of amendments matters.

My amendment in this group is a tiny, modest amendment that relates to evaluations. Amendment 165A in my name asks that any evaluations used to decide on caps for those still being charged for remediation should be looked at in a slightly different way. I do not want anything to be paid—I would go with peppercorn or nil—but if there are caps deployed and evaluations used, I remind noble Lords that we need to rectify a different kind of injustice.

The amendment asks that those valuations take into account that the leaseholder’s ability to pay will have been affected by the fact that their main wealth may be in the form of their asset—their home—and that their asset’s value may well be devalued hugely due to fire safety and building safety policies. The amendment notes that the properties may well be in negative equity as a consequence of government measures.

I just wanted to read out a few examples—we have heard some before, but this will be very quick. A flat in Highbury Stadium Square was purchased in October 2019 for £377,500. It was sold in May 2020 for £167,000. That massive fall was in less than one year. The Department for Levelling Up, Housing and Communities valuation is £400,000. Then there is Brindley House in Birmingham, where a flat was bought for £198,000 in 2007. It was valued by the Department for Levelling Up now as being worth £300,000, but actually it sold for only £140,000. Again, that is below what it was bought for: in 2020, many years after it was bought, it was devalued. The final one I have here is Royal Artillery Quays in south-east London: £250,000 was paid for a flat in 2006, but it was unsold at the guide price at auction recently, for £210,000, and yet the Department for Levelling Up values it as worth £385,000.

I think that indicates that there has been a massive crisis that has affected the value of flats. They are not to be valued in any kind of normal way. It illustrates a broader problem: flat sales are actually down 60% in three years, according to Land Registry data. This raises concerns, more generally, that the flats market could be killed off if they become unduly expensive through higher and higher service charges, as we discussed earlier. It illustrates again the potential unintended consequences of aspects of this Bill, in terms of the implications for a housing crisis through this muddle on valuations. It means that the people who own these flats will lose money if they try to sell them, but if not, they will be charged at a cap as though the flats were worth a lot more money.

On those caps on historical remediations, we have heard some important and persuasive arguments from the noble Lord, Lord Young, and the right reverend Prelate the Bishop of St Albans, about anomalies. I think there are lots of inequities still left in the Bill. The least of these inequities is contained in the way the Government have assessed who can afford to pay what. For example, it might sound as though someone is well off if they own a flat valued at more than £1 million; that must mean that they are wealthy. I appreciate that it is not necessarily popular anywhere in the world to be defending people who own flats worth more than £1 million, but I think it is reasonable to point out that often a leaseholder who bought a flat worth £1 million might well be asset rich but could well be cash poor. Maybe a flat was bought after a lifetime of work, meaning they are enjoying their retirement in that flat, but as of now they are not working full-time. So, they are just not well equipped to pay a much greater cap of £50,000 over 10 years, compared to the £15,000 for someone who, ironically, has a flat valued at £999,999.

As the right reverend Prelate the Bishop of St Albans has pointed out, that flat might not be worth £1 million, and I think that is a really important issue not to forget. This has also been raised by Stephen McPartland, an MP in the other place, and I think it is a general issue. I would like the Government to consider looking again at this valuation of houses for caps.

My Lords, there are many amendments in this group, and I have concerns about the open-ended financial implications while it remains unclear who is responsible for a perpetrator who cannot be found, or who is beyond the reach of the law—thus the importance of the review that the Minister has, I believe, agreed to bring forward much sooner than five years’ hence, although, without my amendment, he would need another Bill if we have to make changes, which seems inevitable.

There have been many powerful speeches, not least from the right reverend Prelate the Bishop of St Albans. I will not repeat what has been said. I have, however, given my support to Amendment 123, and I would like to take the opportunity to commend my noble friend Lord Naseby who in Committee highlighted the unfairness of excluding buy-to-let premises from the safeguards in the Bill for reasons we have heard. The Government have acknowledged that he was right.

However, I agree with my noble friend Lord Young of Cookham that it is difficult to limit this arbitrarily to the ownership of two extra UK properties. I would prefer his formula of four properties, or some other, fairer system. He and others have worked so hard to get the various provisions of the Bill right. For example, he said that we may not have capped the liability of enfranchised leaseholders—which he and I have worked on together—as we had been led to believe in Committee.

I look forward to my noble friend the Minister’s reply on the rationale and an answer to all the good points that have been raised, particularly on enfranchised leaseholders and how we do buy-to-let fairly.

My Lords, this has been an extremely important debate in which we have covered some of the critical issues still outstanding in the Bill. I thank the Minister for the introduction to the amendments. Many of them are good, but we believe there are still problems that need to be sorted out.

I will be brief. I thank the noble Earl, Lord Lytton, for his introduction to Amendment 115. If he decides to divide the House, he will have our support on that amendment.

I turn to my Amendment 155. It is really important that we take account of the principle that has been referred to by other noble Lords: there should be no cost to people who have done nothing wrong. It is not the fault of leaseholders that they have been left with these huge costs. We believe it is desperately unfair to force them to pay a penny, which is why my amendment has the word “zero” in it. As mentioned by the noble Baroness, Lady Pinnock, we must not forget the strain on the mental health of leaseholders. They need clear and proper support, and they are relying on your Lordships to do the right thing by them. To me, this is a moral question. Should leaseholders pay costs that, for many, will still be huge despite the caps proposed by the Government? They are blameless; they should pay nothing.

I thank the noble Lord, Lord Marks, and the noble and learned Lord, Lord Hope of Craighead, for clearly laying out the legal position. It has been important for me to hear that from them, and the detail that they have provided, having had discussions with the Government on their concerns about the ECHR. I also thank the noble Lords, Lord Young of Cookham and Lord Blencathra, and the noble Baroness, Lady Pinnock, for their support.

I confirm that I intend to divide the House on Amendment 155. If it fails to pass, I will be happy to support the noble Lords, Lord Blencathra and Lord Young, on Amendment 158.

My Lords, I spoke to the government amendments as I hoped it would assist the House to have the Government’s views. With the permission of the House, I will now speak again in reply to the points raised by noble Lords on the non-government amendments that they have tabled.

Amendments 155 to 160 and Amendments 162 to 163 deal with leaseholder contribution caps. I thank noble Lords for their contributions and constructive approach, but I am afraid that the Government will not be able to accept these amendments. It is important to bear in mind that leaseholder contributions apply only in certain circumstances, and even then, only when a series of other steps have been exhausted. The caps do not apply at all in relation to cladding defects, nor do they apply where the value of the flat is less than £175,000 outside Greater London and £325,000 inside.

The caps only apply where the building owner or landlord is not linked to the developer and cannot afford to pay in full, where the developer cannot be made to fix their own building, and where the building owners have exhausted all reasonable steps to recover costs from third parties. Leaseholder contributions will only apply where there is no clear developer or wealthy landlord to meet the costs in full, and the party responsible for defective work cannot be identified. The Government consider that this will occur only in a minority of circumstances.

Where there is no party that clearly should pay in full—and only then—our approach spreads the costs fairly and equitably across those with an interest in the building and ensures above all that the most vulnerable leaseholders are protected. The Government’s latest amendments go even further in protecting leaseholders. Where the freeholder or landlord is not at fault and cannot pay to meet the costs, we need to ensure a proportionate approach that takes into account the interests of all parties. That is why our approach spreads the costs equitably among all relevant parties with an interest in the building.

The amendments tabled by the noble Baronesses, Lady Hayman and Lady Pinnock, and—

Can my noble friend quantify how many people he expects will be paying? What is the maximum amount they will pay?

I cannot quantify the exact amount people will pay, but it is fair to say that we have set out a fundamental system of protection that admittedly does not go as far as the zero or peppercorn proposed in opposition amendments, but it does go a considerable way to ensuring that leaseholders are the last in line to pay, as opposed to the first.

As I said, the amendments tabled by the noble Baronesses, Lady Hayman and Lady Pinnock, and the noble Lord, Lord Stunell, seek to reduce leaseholder contributions to zero or a peppercorn. Where there is no clear party that must pay, it would not achieve a fair balance between relevant parties to transfer the costs in full to the freeholder or landlord. I appreciate that that opinion seems to vary from that of noble Lord, Lord Marks of Henley-on-Thames, but that is the government position.

Amendments tabled by my noble friends Lord Young and Lord Blencathra propose to reduce the leaseholder contribution caps, and another amendment proposes alternatively that the contribution is 1% of the lease value. The Government have already taken significant and far-reaching steps to protect leaseholders, protecting those in lower value properties and doubling the repayment period to 10 years. On that basis, I ask the noble Lords not to move their amendments.

Government Amendment 164 provides for the value of a lease to be determined without the need for a valuation. It allows for the value of the lease to be determined by uprating the most recent sale price prior to 14 February 2022. The uprating, which will be set out in regulations, will ensure all properties are compared on a level playing field. The uprating will be based on a metric called the house price index which tracks house prices. This will allow properties to be assigned a nominal present-day value.

Amendment 165, tabled by my noble friends Lord Young and Lord Blencathra, proposes that the value of the lease would be based solely on its most recent sale price. I am afraid the Government will not be able to accept this amendment as it would put leaseholders who have purchased their properties more recently at a significant disadvantage. The Government consider it important that properties are compared like for like, irrespective of when they were last sold. On that basis, I ask my noble friends not to move to their amendments.

I will turn now to Amendments 123 and 124, which deal with the definition of a qualifying lease. The Government have already tabled amendments which will see people with a total of up to three UK properties eligible for the protections. Amendment 123, tabled by my noble friends Lord Young and Lord Blencathra, proposes to increase this to a total of up to five UK properties. Amendment 124, tabled by the right reverend Prelate the Bishop of St Albans, proposes to increase the total to six for individuals in receipt of a state pension. I am afraid that the Government will not be able to accept these amendments.

As I have previously discussed, it is important that the Government take a proportionate approach and ensure that our measures are fair to all parties. This includes considering where certain groups of leaseholders are likely, on average, to be able to afford to contribute to the costs of remediation. The Government need to focus their protections on those who need it most, primarily leaseholders living in their own homes and those who have moved out and are subletting. We also recognise concerns about people with small numbers of additional properties, and that is why we are ensuring those with up to three UK properties will be protected.

There is still significant support available for people with more than three properties. The principal home will always be protected irrespective of how many additional properties are owned. In addition, all leaseholders will be protected from all historical building safety costs where the building owner or landlord is, or is connected to, the developer. This includes leaseholders with more than three properties. In addition, all leaseholders will benefit from our £5.1 billion funding to fix unsafe cladding on high-rise residential buildings, irrespective of how many properties they own.

We are also clear that developers must fix buildings above 11 metres that they had a role in developing or refurbishing. This will benefit all leaseholders with properties in these buildings. Our amendments will also drive a more proportionate approach to building safety as building owners and landlords will no longer be incentivised to commission unnecessary and costly works. This more proportionate approach will benefit all leaseholders. On that basis, I ask the noble Lords to withdraw these amendments.

I turn now to Amendment 115, which extends the leaseholder protections to buildings of all heights containing two or more residential dwellings. It is not necessary to extend the leaseholder protection provisions to lower-rise buildings. Leaseholder protections are needed in multi-occupied buildings above 11 metres as essential and costly remediation works may be needed in buildings of this height from which leaseholders need to be protected. On the other hand, there is no systemic fire safety risk in buildings below 11 metres. Low-rise buildings will not need costly remediation to make them safe. Lower-cost mitigations are likely to be more appropriate.

I am aware of just a handful of low-rise buildings—as mentioned by my noble friend Lord Blencathra—where freeholders have been commissioning such works. This is in the context of there being vastly more low-rise than medium and high-rise buildings. It is clear in this very small number of cases that many of the examples of buildings under 11 metres follow the recommendations of EWS1s undertaken prior to the July statement and prior to the withdrawal of the consolidated advice notice in January of this year, as well as the introduction of the publicly available specification 9980, which followed shortly thereafter. I am completely clear that freeholders and landlords should not be commissioning costly remediation works in buildings below 11 metres tall.

I now turn to Amendment 117, which seeks to bring leaseholder-owned buildings into the scope of the protections. Our leaseholder protection measures work at a fundamental level by preventing building owners and landlords from passing on certain costs to leaseholders through the service charge and requiring building owners and landlords to pay instead. The leaseholder protections do not apply where buildings have been collectively enfranchised, as in these circumstances the building is owned by some or all of the leaseholders. We are therefore unable to apply the leaseholder protection provisions in these circumstances as there is no separate landlord or freeholder with whom costs can be shared.

In essence, there is nothing in these amendments that increases liability for enfranchised leaseholders. Enfranchised buildings are of course eligible for the £5.1 billion building safety fund in the same way as other buildings. It is still our expectation that the polluter will pay, and our expectation is that developers will pay to fix buildings that they had a role in developing or refurbishing. In addition, all the other legislative provisions will apply equally to collectively enfranchised buildings, including all measures and powers in the Bill to pursue developers and cladding manufacturers and compel them to pay. On that basis, I would ask my noble friends to withdraw their amendments.

Amendment 126 seeks to make it clear that the protections transfer to future purchasers of a lease. The drafting of the provisions already does this and I can confirm that the protections that applied on 14 February will transfer to any future purchaser. As this amendment is not needed, I would ask my noble friends and the noble Earl, Lord Lytton, to withdraw it.

Amendment 153 relates to trusts and third-party investors. I thank my noble friends Lord Young and Lord Blencathra, who are always here to help, for tabling this amendment, but I am afraid that the Government will not be able to accept it. Unfortunately, we believe that the amendment will not have the intended effect of ensuring that the assets of third-party investors are considered when the landlord “contribution condition” is assessed. I do, however, consider that your Lordships have brought up an important issue which needs addressing. Therefore, I am happy to commit to consider this further, and would be happy to meet to discuss this matter. Given this commitment, I hope that my noble friends Lord Young and Lord Blencathra will not press their amendment.

Amendment 165A, tabled by the noble Baroness, Lady Fox of Buckley, would mean that the value of the lease is also “determined by reference to” the tenant’s ability to pay, and with reference to “the open market value of” the lease. Taking into account tthe open market value would involve an individual valuation for each property which would be fraught with difficulty as there likely would be disputes between the landlord and leaseholder as to the value assigned. It is critical that the lease value cannot be subject to a protracted dispute. I also point out that the Government have already brought forward a number of measures to further protect leaseholders, notably increasing the repayment period to 10 years. With that explanation, I kindly ask the noble Baroness, Lady Fox of Buckley, not to press her amendment.

I turn now to the amendment from the right reverend Prelate the Bishop of St Albans, who has been a stout campaigner on this matter over the entire passage of this Bill. The right reverend Prelate’s amendment aims to provide further cost protections to leaseholders, including the right of appeal to a court under the fire safety order. First, in practice, there will already be a requirement for responsible persons to communicate such fire safety matters which are relevant to residents. Secondly, this amendment potentially has unintended consequences which could be detrimental to fire safety. It could mean that the cost of fire safety reparations in response to an enforcement notice, even those of relatively small cost incurred as maintenance or reparations of wear and tear, could be taken to a court. This could mean that important fire safety works in more serious cases are simply put on hold pending court action, which may compromise the safety of residents. For the reasons I have outlined, I ask the right reverend Prelate not to press his amendment.

Above all, I thank noble Lords for a high standard of debate which has been touched by moments of expertise which, frankly, I could not entirely follow. It is important that we all rely on noble and learned Lords at all times to tell us what we can and cannot do. I have done my best to respond to the issues raised, and I hope that noble Lords will not press the non-government amendments—but I do not expect so.

My Lords, I will test the opinion of the House on Amendment 115 in a minute. However, before I do so, I will say how much I appreciate the contributions from all noble Lords. It has been an absolutely fascinating debate. As others have said, we are really getting into the core philosophy of what sits behind this Bill. I feel slightly like the skinny fly-half who, having got hold of the rugby ball and made a dash for the opposing side’s try line, finds himself up against a veritable wall of the opposition. It is only seconds later that he finds that a substantial number of heavyweights from his own side have propelled him over the line and applied him and the rugby ball into the mud to score a try. We have not scored a try yet. That, of course, depends on noble Lords—the referees.

I thank the noble Lord, Lord Young, for his summary of this and the other amendments—I found him to be wholly convincing. I will not go into a great deal of detail, given the well-rounded debate we have had, but Amendment 117 seems to address an issue which actually borders on discrimination on the grounds of tenure, and it is a really perverse outcome for commonholders as a tenure. It is a tenure to which the Government should be giving support—we all know that. Excluding them cannot be right.

Various noble Lords have spoken about extending the number of buy-to-let properties. That would rely on their accepting the basic premise of a charge to the leasehold and freehold properties as a default mode—I shall come back to that in a minute.

Amendment 126 is necessary because, unless the benefits under the Bill inure to the benefit of the buyer as a signee, the Bill would simply act to the prejudice of the seller, which would remain and lead to unfair loss, cost, worry, delay and disadvantage—and we cannot have that. A reduction to zero charge would be beneficial and I would support it, but, again, I go back to the question whether I would start from this point.

I welcome a lot of these amendments and would welcome some of those from the Government if I was not troubled by their basic premise of deciding that orphan cost liabilities must be spread between two categories of the innocent. It is a matter of policy; it is not a matter of human rights. I listened carefully to what the noble Lord, Lord Marks, and the noble and learned Lord, Lord Hope of Craighead, said on that, and I found it absolutely fascinating. The fact remains that freeholders as we know them very often have a minority interest by value, so the questions remain: where do you find that real, available hard cash to fund the remediation, and after what degree of litigation, delay and cost?

Despite what the Minister said, and I admire his tenacity, I remain unconvinced by the arguments. On sub-11 metres, I do not see that the argument has been made for the quantifiable difference under the Bill that the Government are trying to achieve, bearing in mind that the Worcester Park building was a four-storey building. I wish to test the opinion of the House on Amendment 115.

My Lords, I cannot call Amendment 116, as it was pre-empted by Amendment 115, which has already been agreed by your Lordships.

Amendment 117

Moved by

117: Clause 120, page 127, line 33, leave out subsection (3)

Member’s explanatory statement

This amendment ensures leaseholders in enfranchised buildings are not excluded from the protection in the Bill.

Moved by

120: Clause 120, page 128, line 16, leave out subsection (7)

Member’s explanatory statement

This amendment removes the power to make supplementary provision, in consequence of the proposed new Clause after Clause 120 in the name of the Minister.

Amendment 120 agreed.

Amendment 121

Moved by

121: After Clause 120, insert the following new Clause—

“Section 120: height of buildings and number of storeys

(1) This section applies for the purpose of section 120.(2) The height of a building is to be measured from ground level to the finished surface of the floor of the top storey of the building (ignoring any storey which is a roof-top machinery or plant area or consists exclusively of machinery or plant rooms).(3) When determining the number of storeys in a building—(a) any storey below ground level is to be disregarded;(b) any mezzanine floor is to be regarded as a storey if its internal floor area is at least half of the internal floor area of the largest storey in the building which is not below ground level.(4) In subsection (2) “ground level”, in relation to a building, means—(a) the level of the surface of the ground immediately adjacent to the building, or(b) where the level of the surface of the ground on which the building is situated is not uniform, the level of the lowest part of the surface of the ground immediately adjacent to it.(5) For the purposes of subsection (3) a storey is “below ground level” if any part of the finished surface of the ceiling of the storey is below the level of the surface of the ground immediately adjacent to that part of the building.”Member’s explanatory statement

This new Clause sets out how the height of a building, and the number of storeys, is to be calculated.

Amendment 121 agreed.

Clause 121: Meaning of “qualifying lease” and the “qualifying time”

Amendment 123 (to Amendment 122) not moved.

Amendment 122

Moved by

122: Clause 121, page 128, line 31, leave out “only one dwelling” and insert “no more than two dwellings”

Member’s explanatory statement

This amendment provides that a lease may be a qualifying lease if a relevant tenant owns no more than two dwellings (excluding their interest under the lease).

Amendment 122 agreed.

Amendment 124 not moved.

Amendment 125

Moved by

125: Clause 121, page 129, line 1, after “dwelling” insert “in England, Wales or Northern Ireland”

Member’s explanatory statement

This amendment ensures that subsection (4)(b) does not apply to Scotland (as the word “ownership” suffices for property in Scotland).

Amendment 125 agreed.

Amendment 126 not moved.

Clause 122: Meaning of “relevant defect”

Amendments 127 to 132

Moved by

127: Clause 122, page 129, line 10, leave out “means a defect as regards a building” and insert “, in relation to a building, means a defect as regards the building”

Member’s explanatory statement

This amendment is a drafting change.

128: Clause 122, page 129, line 11, leave out “including” and insert “or”

Member’s explanatory statement

This amendment is a drafting change.

129: Clause 122, page 129, line 14, leave out from “means” to end of line 19 and insert “any of the following—

(a) works relating to the construction or conversion of the building, if the construction or conversion was completed in the relevant period;(b) works undertaken or commissioned by or on behalf of a relevant landlord or management company, if the works were completed in the relevant period;(c) works undertaken after the end of the relevant period to remedy a relevant defect (including a defect that is a relevant defect by virtue of this paragraph).“The relevant period” here means the period of 30 years ending with the time this section comes into force.(3A) In subsection (2) the reference to anything done (or not done) in connection with relevant works includes anything done (or not done) in the provision of professional services in connection with such works.”Member’s explanatory statement

This amendment makes drafting changes, provides that “relevant works” includes works undertaken to remedy a relevant defect (which means that a defect resulting from those works is capable of being a “relevant defect”), and ensures that professional services are covered (so a defect resulting from such services is capable of being a “relevant defect”).

130: Clause 122, page 129, leave out lines 25 and 26 and insert—

““conversion” means the conversion of the building for use (wholly or partly) for residential purposes;”Member’s explanatory statement

This amendment defines “conversion” for the purposes of this Clause.

131: Clause 122, page 129, line 27, after first “landlord” insert “or management company”

Member’s explanatory statement

This amendment and the next amendment in the name of the Minister change the defined term to “relevant landlord or management company”, bringing in persons who are responsible under a lease for carrying out works.

132: Clause 122, page 129, line 28, at end insert “or any person who is party to such a lease otherwise than as landlord or tenant”

Member’s explanatory statement

See the explanatory statement relating to the previous amendment in the name of the Minister.

Amendments 127 to 132 agreed.

Clause 123: Associated persons

Amendments 133 to 138

Moved by

133: Clause 123, page 129, line 30, leave out from “a” to end of line 32 and insert “partnership or body corporate is associated with another person in the circumstances mentioned in subsections (2) to (3).”

Member’s explanatory statement

This amendment is a drafting change.

134: Clause 123, page 129, line 33, leave out subsection (2) and insert—

“(2) A partnership is associated with any person who was a partner in the partnership, other than a limited partner, at any time in the period of 5 years ending at the qualifying time (“the relevant period”).(2A) A body corporate is associated with any person who was a director of the body corporate at any time in the relevant period.”Member’s explanatory statement

This amendment defines who a partnership is associated with, and that a body corporate is associated with a person who was a director in the relevant period.

135: Clause 123, page 129, line 36, leave out from beginning to second “if” and insert “A body corporate is associated with another body corporate”

Member’s explanatory statement

This amendment is a drafting change.

136: Clause 123, page 129, line 37, leave out from first “the” to “or” in line 38 and insert “relevant period a person was a director of both of them”

Member’s explanatory statement

This amendment is a drafting change.

137: Clause 123, page 130, line 33, at end insert—

“(9) In this section “partnership” means—(a) a partnership within the meaning of the Partnership Act 1890, or(b) a limited partnership registered under the Limited Partnerships Act 1907,or a firm or entity of a similar character formed under the law of a country or territory outside the United Kingdom (and the reference to “limited partner” is to be read accordingly).”Member’s explanatory statement

This amendment defines “partnership” for the purposes of this Clause.

138: Clause 123, page 130, line 33, at end insert—

“(10) The Secretary of State may by regulations provide that, in relation to a prescribed reference in a provision mentioned in subsection (1) to anyone associated with another person, subsections (2) to (3) have effect with prescribed modifications.”Member’s explanatory statement

This amendment provides that subsections (2) to (3) may be modified in their application to a reference, in a provision mentioned in subsection (1), to an associate.

Amendments 133 to 138 agreed.

Schedule 9: Remediation costs under qualifying leases

Amendments 139 to 151

Moved by

139: Schedule 9, page 225, line 10, at end insert—

““joint venture” includes a partnership (as defined by section 123);”Member’s explanatory statement

This amendment defines “joint venture” for the purposes of the Schedule.

140: Schedule 9, page 225, line 10, at end insert—

““prescribed” means prescribed by regulations made by the Secretary of State;”Member’s explanatory statement

This amendment defines “prescribed” for the purposes of the Schedule.

141: Schedule 9, page 225, line 25, at end insert—

“(2) The definition of “service charge” applies in relation to a lease of premises that do not include a dwelling as it applies in relation to a lease of a dwelling.”Member’s explanatory statement

This amendment ensures that the definition of “service charge” works for leases of premises that do not include a dwelling (as to which, see the next amendment in the name of the Minister).

142: Schedule 9, page 225, line 26, at end insert—

“(A1) This paragraph applies in relation to a lease of any premises in a relevant building.”Member’s explanatory statement

This amendment extends the leases to which this paragraph applies.

143: Schedule 9, page 225, line 27, leave out “a qualifying lease” and insert “the lease”

Member’s explanatory statement

This amendment is consequential on the preceding amendment in the name of the Minister.

144: Schedule 9, page 225, line 30, leave out “or has at any time been”

Member’s explanatory statement

This amendment is a drafting change.

145: Schedule 9, page 225, line 34, after “was” insert “, or was in a joint venture with,”

Member’s explanatory statement

This amendment extends the persons responsible for a defect to persons who were in a joint venture with the developer.

146: Schedule 9, page 225, line 35, leave out “carried out” and insert “undertook or commissioned”

Member’s explanatory statement

This amendment provides that the persons responsible for a defect include a person who undertook or commissioned the works in question.

147: Schedule 9, page 225, line 36, leave out “carried out” and insert “undertook or commissioned”

Member’s explanatory statement

This amendment provides that the persons responsible for a defect include a person who undertook or commissioned the works in question.

148: Schedule 9, page 226, line 1, leave out from “who” to second “building” in line 2 and insert “undertook or commissioned the construction or conversion of the building (or part of the”

Member’s explanatory statement

This amendment is consequential on the amendment in the name of the Minister at page 225, line 26.

149: Schedule 9, page 226, line 5, leave out from “a” to end of line 7 and insert “defect which is a relevant defect by virtue of section 122(3)(a);”

Member’s explanatory statement

This amendment is consequential on amendments to Clause 122 in the name of the Minister.

150: Schedule 9, page 226, line 8, leave out “, in relation to a qualifying lease,”

Member’s explanatory statement

This amendment is consequential on the amendment in the name of the Minister at page 225, line 26.

151: Schedule 9, page 226, line 11, leave out paragraph 3

Member’s explanatory statement

This amendment is consequential on the amendment in the name of the Minister at page 225, line 26.

Amendments 139 to 151 agreed.

Amendment 153 (to Amendment 152) not moved.

Amendment 152

Moved by

152: Schedule 9, page 226, line 20, at end insert—

“No service charge payable if landlord meets contribution condition

3A_(1) No service charge is payable under a qualifying lease in respect of a relevant measure relating to any relevant defect if the landlord under the lease at the qualifying time (“the relevant landlord”) met the contribution condition.(2) The contribution condition is that the landlord group’s net worth at the qualifying time was more than N x £2,000,000,where N is the number of relevant buildings within sub-paragraph (3).(3) A relevant building is within this sub-paragraph if a member of the landlord group was, at the qualifying time, a landlord under a lease of the relevant building or any part of it.(4) For the purposes of this paragraph—(a) “the landlord group” means the relevant landlord and any person associated with the relevant landlord;(b) the net worth of the landlord group at the qualifying time is to be determined in accordance with regulations made by the Secretary of State.(5) The Secretary of State may by regulations amend the amount for the time being specified in sub-paragraph (2).(6) This paragraph does not apply if, at the qualifying time, the relevant landlord was—(a) a private registered provider of social housing (as to which see section 80 of the Housing and Regeneration Act 2008),(b) a local authority (as defined by section 29), or(c) a prescribed person.” Member’s explanatory statement

This amendment provides that no service charge is payable under a qualifying lease in respect of a relevant measure relating to any relevant defect if the landlord met the condition mentioned in the paragraph (relating to net worth).

Amendment 152 agreed.

Amendment 154

Moved by

154: Schedule 9, page 226, line 23, leave out from “if” to end of line 28 and insert “the value of the qualifying lease at the qualifying time was less than—

(a) £325,000, if the premises demised by the qualifying lease are in Greater London;(b) £175,000, in any other case.(2) For the purposes of this paragraph the value of a qualifying lease at the qualifying time is its value determined in accordance with paragraph 6 and regulations made under it.”Member’s explanatory statement

This amendment provides that no service charge is payable under a qualifying lease in respect of a relevant measure relating to any relevant defect if the value of the lease at the qualifying time is less than the amount mentioned in the amendment.

Amendment 154 agreed.

Amendment 155

Moved by

155: Schedule 9, page 227, line 14, leave out from “is” to end of line 17 and insert “zero”

Member’s explanatory statement

This amendment would reduce the maximum amount leaseholders could be liable to pay for fire remediation work to zero.

Amendments 156 and 157 not moved.

Amendment 160 not moved.

Amendment 161

Moved by

161: Schedule 9, page 227, line 19, after “time” insert “—

(a) the value of the qualifying lease at that time is to be determined as if the tenant’s total share at that time was 100%;(b) ”Member’s explanatory statement

This amendment provides that where the qualifying lease is a shared ownership lease the value of it at the qualifying time is to be determined as if the tenant's share at that time was 100%.

Amendment 161 agreed.

Amendments 162 and 163 not moved.

Amendment 165 (to Amendment 164) not moved.

Amendment 164

Moved by

164: Schedule 9, page 227, line 29, at end insert—

“(6A) The regulations may in particular provide that, except in prescribed cases, the value of a qualifying lease at the qualifying time is to be determined by—(a) ascertaining the consideration given on the latest disposal of the qualifying lease on the open market to have been made before that time, and(b) if that disposal occurred before 2022, uprating the consideration in accordance with the regulations.”Member’s explanatory statement

This amendment mentions the kind of provision that may be made by regulations under paragraph 6(6).

Amendment 164 agreed.

Amendment 165A not moved.

Amendments 166 to 180

Moved by

166: Schedule 9, page 227, line 34, leave out sub-paragraph (1) and insert—

“(1) A relevant service charge which would otherwise be payable under a qualifying lease is payable only if (and so far as) the sum of—(a) the amount of the service charge, and(b) the total amount of relevant service charges which fell due in the period of 12 months ending with the day on which the service charge fell due,does not exceed one tenth of the permitted maximum.”Member’s explanatory statement

This amendment removes the existing power to make regulations, and provides that a service charge in respect of a relevant measure is payable only so far as the total of such service charges in any 12 month period does not exceed one tenth of the permitted maximum.

167: Schedule 9, page 227, line 39, at end insert—

““relevant service charge” means a service charge under a qualifying lease in respect of a relevant measure relating to any relevant defect.”Member’s explanatory statement

This amendment is consequential on the preceding amendment in the name of the Minister.

168: Schedule 9, page 228, line 3, leave out from “remediation” to end of line 4

Member’s explanatory statement

This amendment removes the condition that a tenant under the qualifying lease was resident at the qualifying time.

169: Schedule 9, page 228, line 5, leave out from “remediation” to end of line 6 and insert “means the removal or replacement of any part of a cladding system that—

(a) forms the outer wall of an external wall system, and(b) is unsafe.”Member’s explanatory statement

This amendment inserts a definition of “cladding remediation” (and removes the power to define that expression).

170: Schedule 9, page 228, line 9, leave out “expenses” and insert “or other professional services”

Member’s explanatory statement

This amendment provides that this paragraph applies to legal or other professional services relating to liability or potential liability of a person in respect of a relevant defect.

171: Schedule 9, page 228, line 11, leave out from “paragraph” to “in” in line 12 and insert “the reference to services includes services provided”

Member’s explanatory statement

This amendment is consequential on the previous amendment in the name of the Minister.

172: Schedule 9, page 228, line 18, after “to” insert “4, 8 and”

Member’s explanatory statement

This amendment clarifies the paragraphs of this Schedule to which the provisions in this paragraph apply.

173: Schedule 9, page 228, line 41, leave out “qualifying”

Member’s explanatory statement

This amendment is consequential on the amendment in the name of the Minister at page 225, line 26.

174: Schedule 9, page 229, line 2, leave out “qualifying”

Member’s explanatory statement

This amendment is consequential on the amendment in the name of the Minister at page 225, line 26.

175: Schedule 9, page 229, line 5, at end insert—

“(4) The Secretary of State may by regulations modify the application of this paragraph as it applies in relation to a lease of premises that do not include a dwelling.”Member’s explanatory statement

This amendment is consequential on the amendment in the name of the Minister at page 225, line 26.

176: Schedule 9, page 229, leave out line 19

Member’s explanatory statement

This amendment is consequential on the amendment in the name of the Minister at page 225, line 10 inserting a definition of “prescribed”.

177: Schedule 9, page 229, line 21, at end insert—

“Presumption: qualifying lease

12A (1) This paragraph applies in relation to a lease that meets the conditions in paragraphs (a) to (c) of section 121(2).(2) The lease is to be treated for the purposes of this Schedule as a qualifying lease unless—(a) the landlord under the lease has taken all reasonable steps (and any prescribed steps) to obtain a qualifying lease certificate from a tenant under the lease, and(b) no such certificate has been provided to the landlord.(3) In this paragraph “qualifying lease certificate” means a certificate, complying with any prescribed requirements, that the condition in section 121(2)(d) was met in relation to the lease at the qualifying time.(4) The requirements that may be prescribed include requirements as to—(a) the information to be provided in the certificate,(b) the form of the certificate, and(c) the execution of the certificate.Presumptions relating to landlord under qualifying lease

12B_(1) The person who was the landlord under a qualifying lease at the qualifying time (“the relevant landlord”) is to be treated for the purposes of this Schedule as having met the contribution condition (as defined by paragraph 3A) unless the landlord under the lease provides to the tenant under the lease a certificate, complying with any prescribed requirements, that the relevant landlord did not meet that condition. (2) The Secretary of State may by regulations provide that (in some or all cases) the condition in paragraph 2(1) is to be treated for the purposes of this Schedule as met in relation to a lease to which paragraph 2 applies unless the landlord under the lease provides to the tenant under the lease a certificate that complies with any prescribed requirements.(3) The requirements that may be prescribed include requirements as to—(a) the information to be provided in the certificate,(b) the form of the certificate, and(c) the execution of the certificate.”Member’s explanatory statement

This amendment provides that certain leases are taken to be qualifying leases unless steps are taken without the tenant providing a certificate, and landlords are taken to have met the contribution condition, or the condition in paragraph 2, unless they provide a certificate.

178: Schedule 9, page 229, line 28, leave out sub-paragraph (3)

Member’s explanatory statement

This amendment is consequential on the amendment in the name of the Minister at page 225, line 10 inserting a definition of “prescribed”.

179: Schedule 9, page 229, line 28, at end insert—

“Information from landlords

13A_(1) The Secretary of State may by regulations make provision requiring a relevant landlord to give prescribed information or documents to a relevant tenant or other prescribed person.(2) Information or documents may be prescribed if they relate to any matter with which this Schedule is concerned.(3) The regulations may require the information or documents to be given in a prescribed way.(4) The regulations may provide that where a relevant landlord fails to comply with the regulations, prescribed costs—(a) are not to be regarded as relevant costs to be taken into account in determining the amount of a service charge payable under a relevant lease, and(b) must not be met from a relevant reserve fund.(5) The regulations may make provision for and in connection with an application to the First-tier Tribunal for an order—(a) determining whether a relevant landlord has failed to comply with the regulations, and(b) if so, requiring the relevant landlord to provide specified information or documents to a specified person by a specified time.“Specified” here means specified in the order.(6) Nothing in sub-paragraph (5) limits the effect of regulations made by virtue of sub-paragraph (4).(7) Information or documents may be specified in an order under sub- paragraph (5) only if the regulations require them to be provided to the specified person.(8) In this paragraph—“relevant costs” has the meaning given by section 18 of the Landlord and Tenant Act 1985 (and this applies in relation to a lease of premises that does not include a dwelling as it applies in relation to a lease of a dwelling);“relevant landlord” means a landlord under a relevant lease;“relevant lease” means a lease of premises in a relevant building;“relevant reserve fund” has the meaning given by paragraph 10; “relevant tenant” means a tenant under a relevant lease.”Member’s explanatory statement

This amendment confers a power to make regulations, requiring landlords to provide certain information and documents, and also enabling an application to be made to the First-tier Tribunal about the provision of information and documents.

180: Schedule 9, page 229, line 28, at end insert—

“13B_ In section 21 of the Landlord and Tenant Act 1985 (service charge information), in subsection (6A) (inserted by section 115), after “2022)” insert “or relevant buildings (as defined by section 120 of that Act)”.”Member’s explanatory statement

This amendment provides that regulations under section 21 of the Landlord and Tenant Act 1985 (service charge information) need not make the provision mentioned in subsection (2) or (3) of that section in relation to relevant buildings.

Amendments 166 to 180 agreed.

Clause 125: Remediation orders

Amendments 181 to 185

Moved by

181: Clause 125, page 131, line 4, after “Tribunal” insert “on the application of an interested person”

Member’s explanatory statement

This amendment is a drafting change.

182: Clause 125, page 131, line 10, at end insert—

“(3A) In subsection (3) the reference to a landlord under a lease includes any person who is party to the lease otherwise than as landlord or tenant.”Member’s explanatory statement

This amendment provides that where repairing obligations under a lease are placed on a person other than the landlord (or tenant), the person falls within the definition of “relevant landlord”, and accordingly a remediation order may be made against them.

183: Clause 125, page 131, leave out line 11 and insert “In this section “interested person”, in relation to a relevant building, means—”

Member’s explanatory statement

This amendment is a drafting change.

184: Clause 125, page 131, line 16, at end insert—

“(ca) a person with a legal or equitable interest in the relevant building or any part of it;”Member’s explanatory statement

This amendment provides that a person with a legal or equitable interest in the building may apply for a remediation order.

185: Clause 125, page 131, line 18, at end insert—

“(6) A decision of the First-tier Tribunal or Upper Tribunal made under or in connection with this section (other than one ordering the payment of a sum) is enforceable with the permission of the county court in the same way as an order of that court.”Member’s explanatory statement

This amendment provides for the enforcement of orders made under this Clause.

Amendments 181 to 185 agreed.

Clause 126: Remediation contribution orders

Amendments 186 to 193

Moved by

186: Clause 126, page 131, line 24, after “corporate” insert “or partnership”

Member’s explanatory statement

This amendment provides that an order may be made in respect of a partnership.

187: Clause 126, page 131, line 28, after “corporate” insert “or partnership”

Member’s explanatory statement

This amendment is consequential on the first amendment of this clause in the name of the Minister.

188: Clause 126, page 131, line 28, leave out from “is” to end of line 29 and insert “—

(a) a landlord under a lease of the relevant building or any part of it,(b) a person who was such a landlord at the qualifying time,(c) a developer in relation to the relevant building, or(d) a person associated with a person within any of paragraphs (a) to (c).”Member’s explanatory statement

This amendment expands the persons in respect of whom an order may be made.

189: Clause 126, page 131, line 38, at end insert—

““developer”, in relation to a relevant building, means a person who undertook or commissioned the construction or conversion of the building (or part of the building) with a view to granting or disposing of interests in the building or parts of it;”Member’s explanatory statement

This amendment defines “developer” for the purposes of the Clause.

190: Clause 126, page 131, line 39, at end insert—

“(za) the Secretary of State,”Member’s explanatory statement

This amendment provides that “interested person” (who may apply for a remediation contribution order) includes the Secretary of State.

191: Clause 126, page 132, line 6, at end insert—

“(e) any other person prescribed by regulations made by the Secretary of State;”Member’s explanatory statement

This amendment provides that “interested person” includes a person prescribed by regulations.

192: Clause 126, page 132, line 6, at end insert—

““partnership” has the meaning given by section 123;”Member’s explanatory statement

This amendment defines “partnership” for the purposes of the Clause.

193: Clause 126, page 132, line 9, at end insert—

“(6) The Secretary of State may by regulations provide that this section applies, with or without modifications, in relation to a building that would, but for section 120(3), be a relevant building.”Member’s explanatory statement

This amendment provides that regulations may apply the Clause (with or without modifications) in relation to buildings that are not relevant buildings because of Clause 120(3) (enfranchised buildings etc).

Amendments 186 to 193 agreed.

Clause 127: Meeting remediation costs of insolvent landlord

Amendments 194 to 199

Moved by

194: Clause 127, page 132, line 18, leave out “the liquidator” and insert “a person acting as an insolvency practitioner in relation to the company”

Member’s explanatory statement

This amendment provides that a person acting as an insolvency practitioner in relation to the company may apply for an order under this Clause.

195: Clause 127, page 132, line 19, after “corporate” insert “or partnership”

Member’s explanatory statement

This amendment provides that an order under this Clause may be made against a partnership associated with the company that is being wound up.

196: Clause 127, page 132, line 20, at end insert “, or

(b) to make such payments to a specified person as the court considers to be just and equitable for the purpose of meeting costs incurred or to be incurred in remedying relevant defects mentioned in subsection (1)(b).Section 126(4) applies for the purposes of this section.”Member’s explanatory statement

This amendment enables an order under this Clause to require the making of payments to a person specified in the order.

197: Clause 127, page 132, line 23, at end insert—

““act as an insolvency practitioner” has the meaning given by section 388 of the Insolvency Act 1986;”Member’s explanatory statement

This amendment is consequential on the first amendment to this Clause in the name of the Minister.

198: Clause 127, page 132, line 25, at end insert—

““partnership” has the meaning given by section 123;”Member’s explanatory statement

This amendment is consequential on the amendment to this Clause at page 132, line 19 in the name of the Minister.

199: Clause 127, page 132, line 27, at end insert—

““specified” means specified in the order.”Member’s explanatory statement

This amendment is consequential on the amendment to this Clause at page 132, line 20 in the name of the Minister.

Amendments 194 to 199 agreed.

Amendments 200 to 202 not moved.

Clause 128: Building industry schemes

Amendments 203 to 207

Moved by

203: Clause 128, page 132, line 31, after “scheme” insert “to be maintained by the Secretary of State, or a person designated by the Secretary of State and acting on the Secretary of State’s behalf,”

Member’s explanatory statement

This amendment is a drafting change.

204: Clause 128, page 132, line 32, at end insert—

“(1A) A scheme may be established for any purpose connected with—(a) securing the safety of people in or about buildings in relation to risks arising from buildings, or(b) improving the standard of buildings,including securing that safety, or improving that standard, by securing that persons in the building industry remedy defects in buildings or contribute to costs associated with remedying defects in buildings.” Member’s explanatory statement

This amendment sets out the purposes for which a scheme may be established.

205: Clause 128, page 132, line 35, at end insert “, and

(b) the conditions that an eligible person must meet in order to become, and remain, a member of the scheme (“membership conditions”),and may provide for different categories of membership.”Member’s explanatory statement

This amendment provides that scheme membership conditions are to be contained in regulations.

206: Clause 128, page 132, line 36, leave out subsections (3) and (4) and insert—

“(3) The membership conditions that may be prescribed include in particular conditions relating to—(a) the remedying of defects in buildings with which an eligible person has a connection of a prescribed kind;(b) the making of financial contributions towards meeting costs associated with remedying defects in buildings (including buildings with which an eligible person has no connection);(c) the use (or use in prescribed cases) of construction products (or construction products of a prescribed description) of prescribed persons carrying out activities in relation to construction products;(d) the provision of information to the Secretary of State or any other person;(e) the competence or conduct of any individual connected with an eligible person (for example, any director or senior manager of an eligible person) or any person with whom an eligible person contracts;(f) whether persons with whom an eligible person contracts are members of a scheme.In paragraph (e) “conduct” includes conduct occurring before the coming into force of this section.(4)The descriptions of persons prescribed by virtue of subsection (3)(c) may in particular be prescribed by reference to—(a) being eligible to be members of a scheme and not being members of that scheme;(b) their conduct in relation to remedying defects in buildings or contributing to costs associated with remedying defects in buildings.(4A) The membership conditions that may be prescribed by virtue of subsection (3)(c) include in particular a condition requiring an eligible person to ensure that no prescribed product of prescribed persons carrying out activities in relation to construction products is used in prescribed cases.”Member’s explanatory statement

This amendment sets out various matters that may, in particular, be the subject of membership conditions for a scheme established under this Clause.

207: Clause 128, page 133, line 6, at end insert—

“(6) Regulations may make provision about the keeping and publication of other lists.”Member’s explanatory statement

This amendment provides that regulations may make provision about the keeping and publication of other lists.

Amendments 203 to 207 agreed.

Clause 129: Building industry schemes: supplementary

Amendments 208 to 215

Moved by

208: Clause 129, page 133, line 9, leave out subsection (2)

Member’s explanatory statement

This amendment is a drafting change.

209: Clause 129, page 133, line 12, at end insert—

“(2A) Regulations may make provision about—(a) applications for membership of a scheme;(b) renewal of membership at prescribed intervals;(c) termination of a person’s membership;(d) the suspension of a person from membership.”Member’s explanatory statement

This amendment and the next amendment to this Clause in the name of the Minister provide that provision about procedure relating to a scheme is to be set out in regulations rather than in a document published by the Secretary of State.

210: Clause 129, page 133, line 18, leave out subsection (4)

Member’s explanatory statement

See the explanatory statement relating to the previous amendment to this Clause in the name of the Minister.

211: Clause 129, page 133, line 25, leave out “Membership criteria may” and insert “Regulations may provide for membership conditions to”

Member’s explanatory statement

This amendment is consequential on the Minister’s amendment to Clause 128 at page 132, line 35.

212: Clause 129, page 133, line 28, at end insert—

“(5A) Regulations may make provision about the determination of disputes.”Member’s explanatory statement

This amendment provides that regulations under Clause 128 may make provision about the determination of disputes.

213: Clause 129, page 133, line 29, leave out subsection (6)

Member’s explanatory statement

This amendment is consequential on the Minister’s amendment to Clause 128 at page 132, line 35.

214: Clause 129, page 133, line 29, at end insert—

“(6A) Regulations may make provision about the termination of a scheme.”Member’s explanatory statement

This amendment provides that regulations under Clause 128 may make provision about the termination of a scheme established under that Clause.

215: Clause 129, page 133, line 35, leave out “on” and insert “out”

Member’s explanatory statement

This amendment is a drafting change.

Amendments 208 to 215 agreed.

Amendment 216

Moved by

216: Clause 129, page 133, line 36, leave out from “products” to “in” in line 37

Member’s explanatory statement

This amendment removes the reference to Schedule 12 in the definition of “persons carrying out activities in relation to construction products” with a view to a definition being inserted into the Clause.

My Lords, we now come to the final debate on Report of this Bill, and I will speak to a number of government amendments on construction products. Noble Lords will be familiar with a number of these amendments already as they were debated and withdrawn during Committee.

I will begin by speaking to Amendments 245 to 249. This set of new clauses will introduce a new cause of action against construction product manufacturers and sellers of construction products. There are currently limited routes which might allow leaseholders, building owners and homeowners to hold to account construction product manufacturers or sellers for their role in the creation of building safety defects.

The cause of action will enable claims to be brought against construction product manufacturers and sellers for their role in causing problems associated with building safety. It will apply where a construction product has been mis-sold or is found to be inherently defective, or if there has been a breach of the construction products regulations applicable at the time and it has been used in the construction of a dwelling or works on that dwelling. If this contributes to a dwelling being unfit for habitation or causes it to be so, a civil claim will be able to be brought through the courts under this cause of action. This cause of action will be subject to a 30-year limitation period retrospectively in relation to cladding products only. The new cause of action will also apply retrospectively to all construction products and be subject to a 15-year limitation period. These limitation periods mirror the changes we are making to the Defective Premises Act. This cause of action will help to ensure that construction products manufacturers, distributors and others are held responsible for the cost of rectifying their mistakes, where a dwelling is unfit for habitation as a result of those mistakes. Amendments 255 and 271 are consequential to these amendments.

I now move on to Amendments 250, 251, 252 and 253, which will create a power to make regulations to require construction products manufacturers, their authorised representatives, importers and distributors to contribute towards the cost of remediation works where they have caused dwellings to be unfit for habitation or contributed to dwellings being unfit for habitation. This will enable the Secretary of State to serve a costs contribution order on a company that has been successfully prosecuted under the construction products regulations. Amendment 253 will allow the Secretary of State to appoint an independent person to inspect buildings where the relevant product has been used. They will assess whether the conditions for serving an order are met, the remediation works required and the cost of those works. Amendment 251 will also create a power to make regulations to take an alternative route through the courts. This will enable the Secretary of State to apply to a court for a costs contribution order to be made against a company. The grounds for making an application would be the same. Amendment 253 will enable the Secretary of State to require a company to contribute towards the cost of building assessments carried out as part of this process.

Amendment 256 makes a technical correction to secure that the maximum fine that can be imposed under the construction products regulations for an offence in Scotland is the statutory maximum in Scotland.

Setting out this scheme in secondary legislation will enable the detailed design of these powers to interact with the construction products regulations, including those that will be made using the Bill’s powers. Amendments 269, 270 and 273 are consequential to these amendments.

Amendment 257 will require that the affirmative procedure is used to make any regulations that would remove construction products from the list of safety-critical products set out in the construction products regulations.

I have considered carefully the important points raised by the Delegated Powers and Regulatory Reform Committee in its report on the Bill regarding the parliamentary procedure that should be used to make regulations under this power. I thank the noble Lords, Lord Stunell and Lord Khan, for their contributions on this matter in Grand Committee. It is of course right that regulations receive the proper level of parliamentary scrutiny. That is why Amendment 257 will supplement the existing safeguards in Schedule 12, which prevents products being added to the list unnecessarily or removed without good reason. I hope the noble Lords are reassured that this strikes the right balance between the need for parliamentary debate to scrutinise regulations and the proper use of the limited and valuable time of parliamentarians.

Finally, Amendments 216 and 217 make a minor drafting change in relation to the definition of

“persons carrying out activities in relation to construction products”

in Clause 129. I beg to move.

My Lords, briefly, we welcome the changes that the Minister has reported, particularly Amendments 257, 258 and 259, which will bring back to the affirmative procedure some of those matters which we raised in Committee. We appreciate that and we are very happy to support the Government’s amendments in that respect.

My Lords, I welcome this final group of amendments relating to construction products. The Government are absolutely right to take steps to increase the recourse available to residents and responsible persons where construction or cladding products have led to residences becoming uninhabitable. Government

Amendment 246 is particularly welcome, as it provides for a new right of action where breach of regulations relating to construction projects leads to a building or dwelling becoming unfit for habitation. Every person and family deserves the right to live in a safe and habitable home. On this issue, I would be grateful if the Minister could clarify whether the Homes (Fitness for Human Habitation) Act already provides for similar guarantees.

I also particularly welcome Amendments 247 and 248, which intend to provide a right of action for a 30-year limitation period where historic defaults relating to cladding either cause or are a factor in a building or dwelling becoming unfit for habitation. I am sure that the whole House will agree that the passage of the Bill should represent a turning point for building safety in the UK, and I hope that these amendments will contribute to that.

I thank noble Lords for their support for these important amendments —I will write to the noble Lord on his question; I do not have it in my pack. This shows that, throughout the Bill, we have listened to noble Lords across the House and have done what we can. I thank noble Lords for their engagement and for their continued support for most of the Bill. It is important because it will ensure that in this country everyone’s home is a place of safety.

Amendment 216 agreed.

Amendment 217

Moved by

217: Clause 129, page 133, line 37, at end insert—

““construction product” has the meaning given by regulations;“persons carrying out activities in relation to construction products” include (without limitation)—(a) a manufacturer of construction products,(b) a person who markets or supplies construction products to others, and(c) a person who imports construction products into the United Kingdom for use, marketing or supply;”Member’s explanatory statement

This amendment defines “construction product” and “persons carrying out activities in relation to construction products” for the purposes of Clause 128.

Amendment 217 agreed.

Clause 130: Prohibition on development for prescribed persons

Amendments 218 to 220

Moved by

218: Clause 130, page 134, line 7, at end insert—

“(1A) The descriptions of persons which may be prescribed include in particular persons who—(a) are eligible to be members of a scheme established under section 128, and(b) are not members of that scheme.”Member’s explanatory statement

This amendment provides that the descriptions of persons whom regulations may prohibit from carrying out development under this Clause include, in particular, persons who are eligible to be members of a scheme established under Clause 128 but are not members of that scheme.

219: Clause 130, page 134, line 8, after “prohibition” insert “under the regulations”

Member’s explanatory statement

This amendment is consequential on the previous amendment to this Clause in the name of the Minister.

220: Clause 130, page 134, line 11, at end insert—

“including securing that safety, or improving that standard, by securing that persons in the building industry remedy defects in buildings or contribute to costs associated with remedying defects in buildings.”Member’s explanatory statement

This amendment clarifies the purposes for which a prohibition may be imposed.

Amendments 218 to 220 agreed.

Amendment 221

Moved by

221: Clause 130, page 134, line 13, at end insert—

“(3A) Within the period of five years beginning with the day on which this section comes into force, the Secretary of State must by regulations prohibit any developer who has not completed all previously identified works in relation the remediation of fire safety risks from carrying out development of land in England.”Member’s explanatory statement

This amendment would require the Secretary of State to prevent developers who have not completed previously identified fire safety work within 5 years from carrying out any further development.

My Lords, I wish to move Amendment 221 formally and divide the House on it. We have already decided that leaseholders will not pay towards the cost of remediation, and now we have the chance to decide that it is done in a timely way. That is just as important, so I beg leave to seek the opinion of the House.

Amendments 222 and 223

Moved by

222: Clause 130, page 134, line 17, leave out “the proposed beginning of”

Member’s explanatory statement

This amendment has the effect of allowing regulations to require notifications to be given about development other than notifications relating only to the proposed beginning of development.

223: Clause 130, page 134, line 26, leave out paragraph (b)

Member’s explanatory statement

This amendment is consequential on the previous amendment to this Clause in the name of the Minister.

Amendments 222 and 223 agreed.

Clause 131: Building control prohibitions

Amendments 224 to 226

Moved by

224: Clause 131, page 134, line 37, at end insert—

“(1A) The descriptions of persons which may be prescribed include in particular persons who—(a) are eligible to be members of a scheme established under section 128, and(b) are not members of that scheme.”Member’s explanatory statement

This amendment provides that the descriptions of persons in relation to whom regulations may impose a building control prohibition under this Clause include, in particular, persons who are eligible to be members of a scheme established under Clause 128 but are not members of that scheme.

225: Clause 131, page 134, line 38, after “A” insert “building control”

Member’s explanatory statement

This amendment is consequential on the previous amendment to this clause in the name of the Minister.

226: Clause 131, page 135, line 3, at end insert—

“including securing that safety, or improving that standard, by securing that persons in the building industry remedy defects in buildings or contribute to costs associated with remedying defects in buildings.”Member’s explanatory statement

This amendment clarifies the purposes for which a prohibition may be imposed.

Amendments 224 to 226 agreed.

Clause 132: Building liability orders

Amendment 227

Moved by

227: Clause 132, page 136, line 11, leave out “relates to a building in England and”

Member’s explanatory statement

This amendment has the effect of applying this clause to Wales.

Amendment 227 agreed.

Amendment 228

Moved by

228: After Clause 133, insert the following new Clause—

“Order for information in connection with building liability order

(1) A person of a prescribed description may apply to the High Court for an information order.(2) An “information order” is an order requiring a specified body corporate to give, by a specified time, specified information or documents relating to persons who are or have at any time in a specified period been, associates of the body corporate.(3) An information order may be made only if it appears to the court—(a) that the body corporate is subject to a relevant liability (within the meaning of section 132), and(b) that it is appropriate to require the information or documents to be provided for the purpose of enabling the applicant (or the applicant and others) to make, or consider whether to make, an application for a building liability order.(4) In this section—“associate” has the meaning given by section 133; “building liability order”: see section 132;“prescribed” means prescribed by regulations made by the Secretary of State;“specified” means specified in the information order.”Member’s explanatory statement

This new Clause provides that a person prescribed by regulations may make an application to the High Court for an order requiring a body corporate to give information relating to persons who are associates of the body corporate and sets out when the High Court may make the order.

Amendment 228 agreed.

Amendment 229 not moved.

Clause 136: Limitation periods

Amendment 230

Moved by

230: Clause 136, page 142, line 3, leave out from “section” to end of line 5 and insert “applies in relation to a claim which, before this section came into force, was settled by agreement between the parties or finally determined by a court or arbitration (whether on the basis of limitation or otherwise).”

Member’s explanatory statement

This amendment is a drafting change.

Amendment 230 agreed.

Amendments 231 to 233 not moved.

Amendment 234

Moved by

234: After Clause 136, insert the following new Clause—

“Building safety cost orders

(1) The Secretary of State must by regulations make provision for the Building Safety Cost Panel to make building safety cost orders on the application of an interested person.(2) A “building safety cost order” under this section is an order requiring a specified body corporate to make payments to a specified person, for the purpose of meeting costs incurred or to be incurred in remedying relevant defects (or specified relevant defects) relating to a relevant building.(3) An order may—(a) require the making of payments of a specified amount, or payments of a reasonable amount in respect of the remediation of specified relevant defects (or in respect of specified things done or to be done for the purpose of remedying relevant defects);(b) require a payment to be made at a specified time, or to be made on demand following the occurrence of a specified event;(c) provide for payment in services or money’s worth.(4) The regulations must make provision for the Building Safety Cost Panel to issue a warning notice to a person before determining whether to make a building safety cost order under this section against that person.(5) The regulations must make provision requiring that a building safety cost order under this section—(a) be made in a prescribed form; (b) contain prescribed information.(6) The regulations may make provision about service of a building safety cost order under this section including—(a) how an order is to be served;(b) when an order is to be taken as having been served;(c) the persons on whom an order must be served.(7) The regulations must make provision in relation to—(a) enforcement of a building safety cost order made under this section (including enforcement by the Secretary of State or the tribunal);(b) powers of the Secretary of State to order a person served with a building safety cost order to pay any costs incurred by the Secretary of State under section (Building safety cost order: determinations) in respect of a building safety cost order under this section.(8) The regulations may make provision for persons to apply to the Secretary of State for a review of a building safety cost order under this section.(9) The regulations must make provision for appeals to the tribunal in relation to—(a) a decision of the Building Safety Cost Panel to make or not make a building safety cost order under this section;(b) a refusal by the Building Safety Cost Panel to review a building safety cost order under this section;(c) the outcome of a review by the Building Safety Cost Panel of a building safety cost order under this section.(10) The regulations may in particular include provision suspending a requirement to pay an amount due under a building safety cost order under this section pending the determination of a review.(11) The Secretary of State must make regulations under this section within a period of three months beginning with the day this section comes into force.(12) In this section—“associated”: see section 123;“interested person”, in relation to a relevant building, means—(a) the regulator (as defined by section 2),(b) a local authority (as defined by section 29) for the area in which the relevant building is situated,(c) a fire and rescue authority (as defined by section 29) for the area in which the relevant building is situated, or(d) a person with a legal or equitable interest in the relevant building or any part of it;“prescribed” means prescribed by regulations under this section;“relevant building” means a building consisting of or containing one or more dwellings;“relevant defect”: see section 122;“specified” means specified in the order.(13) This section comes into force on the day this Act is passed.”Member’s explanatory statement

This new Clause confers a regulation-making power for the Secretary of State to provide for making of building safety cost orders by the Building Safety Cost Panel.

Amendments 235 to 237 not moved.

Clause 139: “Relevant owner”, “new build home” and “developer”

Amendments 238 to 242

Moved by

238: Clause 139, page 144, line 5, after “converted” insert “, or to which any other works have been carried out,”

Member’s explanatory statement

This amendment clarifies that a home created by, for example, extending an existing building will be a “new build home” for the purposes of the new homes ombudsman scheme.

239: Clause 139, page 144, line 6, after “conversion” insert “or works”

Member’s explanatory statement

This amendment is consequential on the amendment to page 144, line 5 that appears in the Minister’s name.

240: Clause 139, page 144, line 29, after “conversion of” insert “, or carrying out of any other works to,”

Member’s explanatory statement

This amendment clarifies that “developer” for the purposes of the new homes ombudsman scheme will include a person who, for example, creates a home by extending an existing building.

241: Clause 139, page 144, line 31, after “conversion of” insert “, or carrying out of any other works to,”

Member’s explanatory statement

This amendment clarifies that “developer” for the purposes of the new homes ombudsman scheme will include a person who, for example, extends an existing building so as to change the number of homes in it.