HANSARD
Building Safety (Leaseholder Protections etc.) (England) (Amendment) Regulations 2023
- Motion to Approve
- 1:25 pm
- That the draft Regulations laid before the House on 12 June be approved.Relevant documents: 45th Report from the Secondary Legislation Scrutiny Committee and 44th Report from the Joint Committee on Statutory Instruments (special attention drawn to the instrument)
- My Lords, in moving the draft regulations, I will also set out why the Government oppose the amendment tabled by the noble Earl, Lord Lytton.The regulations amend the leaseholder protection regulations 2022 to address points raised by the Joint Committee on Statutory Instruments last July, as well as two stayed judicial review applications, and clarify some provisions to ensure the leaseholder protections have the effect originally intended. While many noble Lords will be aware of the background to the leaseholder protections, I will start by providing some context and background to these regulations. Before the Government introduced the leaseholder protections, many leaseholders found themselves liable for unlimited costs for remediating historical safety defects in their buildings—costs that they could not afford for problems that were not their fault. Since the provisions came into force last summer, many leaseholders have either been protected from these costs entirely or had their liability firmly capped.During the debates on the affirmative regulations last July, the Government committed to bring forward further changes should it become apparent that they were necessary. Contrary to what the noble Earl, Lord Lytton, purports, these regulations do just that: delivering additional detail needed to address a number of operational points that had come to light in the early operation of the leaseholder protections. The regulations also address points raised in two stayed judicial review applications and points raised in the Joint Committee on Statutory Instrument’s report of July 2022, and make further changes to clarify and simplify the provisions in the 2022 regulations.Since the protections came into force last summer, we have engaged extensively with leaseholders, landlords and others affected, including lenders and conveyancers. The Government do not consider that a formal consultation would add to our understanding of the issues specifically covered by these regulations, and I note that there is no requirement under the Building Safety Act 2022 to consult formally on these regulations. We have also engaged in two rounds of pre-laying scrutiny with the Joint Committee. In its 44th report of the 2022-23 Session, it reported the regulations for one case of defective drafting in relation to a lack of consequence for the failure to notify the landlord associated with the developer of their liability.The Government are grateful to the Joint Committee for its careful scrutiny of these regulations and have considered this issue carefully. As set out in the department’s memorandum, published by the committee, the Government are satisfied that there are no issues with the regulations that will prevent the process operating successfully. We believe it is imperative that the regulations come into force before the Summer Recess to alleviate the issues facing named managers and landlords. However, we will, of course, monitor closely the progress of future cases, and if it becomes apparent that further changes are necessary we will come back to Parliament with proposals.
- 1:30 pm
- The House will be aware that the Secondary Legislation Scrutiny Committee has stated that the Explanatory Memorandum should provide further information about the judicial review applications. I am grateful to the committee for its recommendations, which the Government have carefully considered. I can confirm that we have replaced the Explanatory Memorandum to include the information provided to the committee and set out in the appendix to its report.
- These regulations can be considered in three parts. First, the regulations address points raised in the ninth report of the Joint Committee on Statutory Instruments of July 2022. The regulations we are considering make it clear it that L—the body responsible for managing the building, be that the landlord, resident management company, right-to-manage company or named manager—must issue a notice to the landlord with the liability to pay to recover the remediation amount and set out the information to be included in the notice, which is the amount to be recovered and information on the appeals process.
- The regulations clarify the powers of the First-tier Tribunal in determining the outcome of an appeal. If the appeal is unsuccessful, the appellant will have to pay the amount set out in the notice. If the appeal is successful, the appellant will have to pay nothing, or an alternative amount determined by the First-tier Tribunal.
- The regulations remove Regulation 6(1) from SI 2022/859, which purports to allow a leaseholder to provide a leaseholder deed of certificate to their landlord. The Joint Committee considered this to be ultra vires, but nothing prevents a leaseholder doing so voluntarily. The regulations clarify that failure to provide a completed leaseholder deed of certificate and the required evidence will result in the lease being treated as if it were not a qualifying lease, and provide that “shared ownership lease” has the same meaning as that used in Schedule 8 to the Act.
- Secondly, the regulations address points raised in two stayed judicial review claims. The regulations make provision for “named managers” to recover the cost of relevant measures in relation to relevant defects from building owners and landlords in the same way as resident-led management companies. The regulations also provide for L to be able to recover notified amounts as a civil debt, and for them to be able to pursue a remediation contribution order to recover costs, such as from a building owner or a developer. The regulations provide that landlords associated with the developer must be notified of their liability to pay for relevant measures or relevant defects, but nothing in the regulations stops L instead pursuing, for example, a landlord who met the contribution condition.
- Thirdly, the regulations deliver additional detail to clarify the intended effect of the leaseholder protections. The regulations also provide for Homes England—the department’s delivery partner for remediation work outside London—to apply to the First-tier Tribunal for a remediation order or remediation contribution order. The regulations provide that a landlord may apply for an extension to the appeal process of 30 days with the permission of the First-tier Tribunal, to enable out-of-court engagement. The regulations also provide for an additional point where the landlord must update the landlord certificate: within four weeks of becoming aware that a leaseholder deed of certificate has been submitted.
- Finally, the Schedule to these regulations replaces and simplifies the existing landlord certificate, and amendments are made to the information regulations so that the current landlord does not need to provide certain evidence where they accept liability for a relevant defect. This reduces the information-sharing requirement to that essential for the leaseholder and L to determine liability. The regulations also provide that current landlords must provide L with copies of the landlord and leaseholder certificates within a week of completion or receipt, to enable them to apportion costs in line with the 2022 regulations. Where the current landlord fails to comply, the regulations provide that costs cannot be passed on to leaseholders.
- The regulations are a key step to improve the implementation of the leaseholder protections set out in the Building Safety Act and regulations. They serve a specific purpose to provide the detail needed to give full effect to the leaseholder protection provisions, and they address concerns raised last summer by the Joint Committee on Statutory Instruments and points raised in the two stayed judicial review applications.
- As my honourable friend the Minister of State, Rachel Maclean MP, noted in the debate in the other place on Monday 17 July, there is more to do on leaseholder protections, some of which will require primary legislation, and the Government will come back to the House with further proposals in due course. On the basis of the information I have set out for your Lordships, I hope noble Lords will join me in opposing the regret amendment to the Motion and supporting the draft regulations, which I commend to the House.
- Amendment to the Motion
- Moved by
- At end to insert “but this House regrets that they have been laid without provisions to remedy operational defects in the Building Safety (Leaseholder Protections) (England) Regulations 2022 (SI 2022/711) and the Building Safety (Leaseholder Protections) (Information etc) (England) Regulations 2022 (SI 2022/859); and further regrets that His Majesty’s Government have not adequately consulted relevant practitioners prior to the laying of these Regulations.”
- My Lords, before I proceed, I thank the Minister for reaching out. We did not succeed in getting a meeting together, but I hope that the bullet points I submitted to her office yesterday were of some help.As the Minister explained, these regulations amend two previous sets of regulations, SI 2022/711 and SI 2022/859. It is true that these new regulations streamline some of the aspects in those regulations. My point is that they fail to deal with the fundamentals of those earlier regulations, which, given where we are now and what is known about their operation, should have been a proper matter for consideration in the application of regulatory power. They represent a theoretical approach at best and, from all that I have heard from practitioners, do not accord with the real world of buying and selling leasehold flats nor the technical or practical issues associated with conveyancing in particular.It leaves one wondering where to start with all this. There are too many unknown issues: the extent of remediation; the responsibility that would arise under the Building Safety Act for defects; the true legal liability for those defects having arisen; the cost of remediation; and the potential for “known unknowns”, to quote Donald Rumsfeld, or indeed currently unknowable remediation requirements and their likely cost.Professionals tell me that they do not believe that the comments made by the Secondary Legislation Scrutiny Committee and the Joint Committee on Statutory Instruments have been properly addressed. Why is that? There are too many variables, exclusions and qualifications in the process of leaseholder certificates of registration, the content and accuracy of requests to the landlord, the landlord certificates themselves, and the extent to which the landlord is, in turn, reliant on information from others not within its control. There is an essentially continuous iterative process of company worth evaluation and liability assessments. The time lag where land registration is an essential part of the information package, which I understand might occur, is governed by the fact that the Land Registry has a backlog it is working through of several months’ duration.
- 1:45 pm
- I will give the House a couple of examples where there is, I believe, some ambiguity about which companies should be included in a landlord group. Section 121(8) of the Act states that: