Govt makes haphazard attempt to alleviate some of the blockages in flat sales mess caused by EWS1

annetheman

Salemicus said:

There's nothing complicated about the fact that the people who should pay for something don't want to pay, and in many cases would struggle to pay. It happens all the time. Yes, some people might even go bankrupt, and it might also lead to a fire sale (no pun intended) of unmortgageable flats to pay the service charges. That's sad for the people involved, but it's no solution to stick some unrelated party with the bill on the grounds that "they can afford it."

"It's your flat so fix it" is a perfect summary of the issue. "It's complicated," as so often, is the whining of a politically powerful special interest that wants to kick up dust to obscure the central truth that the owners of these flats are (1) morally and legally responsible for paying for remediation (2) the ones who will benefit from the work being done. It's much easier to stick politically unpopular developers with a massive bill than to expect to hold people accountable on the leases they've signed, but I'm hopeful that the government will do the right thing and kick dirt into your face.

Can the government help here? Yes, but the last thing it should be doing is subsidising these people. It should be looking for ways to make remedial work cheaper (genuinely cheaper, not just shifting the cost to someone else), find ways to provide quick certification where no work needs doing, and address the shortage of inspectors.

Developers who built the buildings with flammable materials are unrelated parties, are they? Can you explain your logic here? Note that the suggested levy is on developers who built buildings requiring remediation, not just any developer.

Your point 1) again is incorrect. The responsible party - legally - is the building owner. They can pass on the cost to the leaseholder, but the leaseholder is not responsible for the external walls at all. If I were a leaseholder and had £80,000, I couldn't just start fixing the building's walls because I wouldn't own them.

Your point 2) about who "benefits", I don't think is wholly relevant to who pays but if you do want to consider this, arguably it is the person who can lease the flats and earn money from them. Leaseholders can declare bankruptcy, move somewhere else and leave the building owner with a flammable building, no income and no way to pay for it. Freeholders cannot do much either, they'll have a bunch of defaulted leases and a building they can only condemn. Either party can sell LH or FH to cash buyers for far less, but neither really will benefit more than the other. A solution is in everyone's interest.

On your points about what govt should do:
make remedial work cheaper (genuinely cheaper, not just shifting the cost to someone else) - please suggest a way govt can do this without using taxpayer funds? Govt haven't addressed this at all.

find ways to provide quick certification where no work needs doing - absolutely. We are all waiting with bated breath for this. Hence EWS1 was introduced, not by the govt - and then the entire process complicated by the govt's advice notes that widened the scope. They should have been implementing a proper process by which building requiring remediating can be identified, instead they exacerbated the situation and ground most flat sales and remortgages to a halt.

address the shortage of inspectors - govt have pledged, only as of yesterday, £700,000 to train 2000 surveyors to perform EWS1 surveys. RICS responded (see link) saying that is nowhere near enough and won't help - essentially "thanks but this won't change anything".
Issue on inspectors who CAN do the surveys not being able to source PI are still not resolved.

More is required from central govt - actions so far have been inadequate, or as another poster described - "useless".
*edit to add*
There has been some positive movement on this who pays argument though. This week, the House of Lords passed through Amendment 13 to the Fire Safety Bill which will make building owners passing on fire safety remediation costs to leaseholders illegal.

Leaseholders paying to make someone else's walls fire safe when they are not is, as the Baroness who proposed A13 said, wholly unfair. I concur!

Crashy_Time

annetheman said:

Salemicus said:

Ah yes, the make someone else pay for it ploy. Let's make future development more expensive (because God knows we build too much in this country) so the people responsible for fixing this don't have to dip into their own pockets. Heaven forbid that anyone should have to pay to make their own home safe.

I suggest you read the article I posted by way of introduction to the complexity of the issue because this response demonstrates you don't understand at all why this requires central intervention. 

There are multiple stakeholders involved; ultimately by law, building owners have a legal responsibility to remediate.
Building owners can then recoup their cost for doing so using leasehold law, depending on the individual leases.

The problem is where - as is the case in thousands of buildings - most leaseholders cannot afford the amounts billed sent to them by building owners, who also cannot afford to fix their building and are legally responsible for doing so - hence why they are asking for payment from leaseholders - so the building doesn't get fixed.

So we have a situation where nobody can move, remortgage, rent or sell, hundreds of thousands are bankrupt and Grenfell 2.0, 3.0, 4.0 etc happens, one after the other, because the tinderboxes are still tinderboxes.

Insurers won't pay because of warranty limitations or invalidations that have arisen after inspection. Developers won't pay if the building met regs at the time i.e. they did nothing wrong, either - although we have seen in the Grenfell inquiry this week how so many in the developer supply chain manipulate tests in order to do just that. 

Somebody has to pay and MHCLG are considering "all funding options" yet still haven't responded to the option of making developers contribute, too.

You have to ask yourself: why is that? When Barratt's - developer with the highest number of buildings found to require remediation so far - will not go bankrupt contributing 5% of their sales profits, which will work out to tens of millions.
One leaseholder forking out £80,000 by the govt's own estimates - absolutely will. Now times than by 3 million and you have a crisis.

It's a gargantuan issue - thank you for your input but "it's your flat so fix it" just doesn't cut it here, it's far too complicated.

Anyone with a better grasp of the issues have opinions on the announcement?

Everything will be done to help the developers pay as little as possible, that is my opinion.

NameUnavailable

Crashy_Time said:

annetheman said:

Salemicus said:

Ah yes, the make someone else pay for it ploy. Let's make future development more expensive (because God knows we build too much in this country) so the people responsible for fixing this don't have to dip into their own pockets. Heaven forbid that anyone should have to pay to make their own home safe.

I suggest you read the article I posted by way of introduction to the complexity of the issue because this response demonstrates you don't understand at all why this requires central intervention. 

There are multiple stakeholders involved; ultimately by law, building owners have a legal responsibility to remediate.
Building owners can then recoup their cost for doing so using leasehold law, depending on the individual leases.

The problem is where - as is the case in thousands of buildings - most leaseholders cannot afford the amounts billed sent to them by building owners, who also cannot afford to fix their building and are legally responsible for doing so - hence why they are asking for payment from leaseholders - so the building doesn't get fixed.

So we have a situation where nobody can move, remortgage, rent or sell, hundreds of thousands are bankrupt and Grenfell 2.0, 3.0, 4.0 etc happens, one after the other, because the tinderboxes are still tinderboxes.

Insurers won't pay because of warranty limitations or invalidations that have arisen after inspection. Developers won't pay if the building met regs at the time i.e. they did nothing wrong, either - although we have seen in the Grenfell inquiry this week how so many in the developer supply chain manipulate tests in order to do just that. 

Somebody has to pay and MHCLG are considering "all funding options" yet still haven't responded to the option of making developers contribute, too.

You have to ask yourself: why is that? When Barratt's - developer with the highest number of buildings found to require remediation so far - will not go bankrupt contributing 5% of their sales profits, which will work out to tens of millions.
One leaseholder forking out £80,000 by the govt's own estimates - absolutely will. Now times than by 3 million and you have a crisis.

It's a gargantuan issue - thank you for your input but "it's your flat so fix it" just doesn't cut it here, it's far too complicated.

Anyone with a better grasp of the issues have opinions on the announcement?

Everything will be done to help the developers pay as little as possible, that is my opinion.

Of course it will. More 'chumocracy' from Boris and co.

GDB2222

I'd disagree about one point. If the problem could have been solved by all the developers contributing 5% of their profits, then it would have been solved by now.

You mentioned that there are 3 million leaseholders with an issue. At an average cost of say £20k, that's £60 bn. 

annetheman

GDB2222 said:

I'd disagree about one point. If the problem could have been solved by all the developers contributing 5% of their profits, then it would have been solved by now.

You mentioned that there are 3 million leaseholders with an issue. At an average cost of say £20k, that's £60 bn. 

Developers haven't contributed a %age of their profits because they haven't been asked to. As I mentioned, MHCLG has yet to respond to this proposed funding solution. Whilst not perfect, it's a workable model we could adopt that could lead to actual progress without bankrupting millions or depending solely on taxpayer funds and is better than what we have now (still arguing over who pays, less than 4% remediated, industry contradicting govt, etc etc):
https://www.insidehousing.co.uk/insight/insight/the-cladding-crisis-down-under-what-we-can-learn-from-the-response-to-grenfell-in-australia-64164

Numbers affected are all estimates -  based on avg household size of 2.4. More: https://www.insidehousing.co.uk/insight/insight/fact-check-how-many-people-live-in-buildings-with-dangerous-cladding-67000
"600,000 in affected tall buildings and millions more in medium rise towers." Which buildings need remediation? We don't know until we check. Who should we check? We don't know because EWS1 is for >18m but govt's advice note says all buildings of any height. 

You can look at the draft Building Safety Bill supplementary notes for the govt's estimates of how many are affected and how much they could be charged - circa £80,000. Similar to the above.

Estimates float around in the industry between £30 and 50 billion to remediate residential buildings but who knows for sure - one thing is certain, the scale of this is massive. Biggest post-war housing crisis in this country. Possible bigger than the PPI scandal, IMO.

It's worth mentioning again that some developers and building owners have remediated at their own cost already.

This was about the EWS1 form and the issues its interpretation has caused but you can't really consider one without the other (cladding remediation).

[Deleted User]

I can sympathise that it is a horrible situation for anyone to be in but I dont see why the developers who built the buildings should be held financially responsible.   They built according to government rules at the time. As long as they built them in line with those regulations and didnt cut corners then how are they to blame?  And as private companies how can the government force them to pay for something that isnt their fault?  

I had to pay £10k to remove asbestos from a property i bought.  I wouldnt expect the original builder to pay for that.  I had to rewire unexpectedly but I wouldnt expect the cost of this to be paid by a levy on electricians who wired properties decades ago using rules that were applicable at the time

you seem very well read on the topic so my genuine question is, how is this any different to any building owner being responsible in keeping their building safe and up to date with constantly changing regulations and safety advice?

GDB2222

annetheman said:

GDB2222 said:

I'd disagree about one point. If the problem could have been solved by all the developers contributing 5% of their profits, then it would have been solved by now.

You mentioned that there are 3 million leaseholders with an issue. At an average cost of say £20k, that's £60 bn. 

Developers haven't contributed a %age of their profits because they haven't been asked to.

You are missing the point. Developers haven't been asked to contribute a %age of profits because it wouldn't make any difference. If the cost of the repairs is say £60 bn and a suitable %age of profits is say £100m, it's going to take 600 years to pay for all the flats.

annetheman

Deleted_User said:

I can sympathise that it is a horrible situation for anyone to be in but I dont see why the developers who built the buildings should be held financially responsible.   They built according to government rules at the time. As long as they built them in line with those regulations and didnt cut corners then how are they to blame?  And as private companies how can the government force them to pay for something that isnt their fault?  

I had to pay £10k to remove asbestos from a property i bought.  I wouldnt expect the original builder to pay for that.  I had to rewire unexpectedly but I wouldnt expect the cost of this to be paid by a levy on electricians who wired properties decades ago using rules that were applicable at the time

you seem very well read on the topic so my genuine question is, how is this any different to any building owner being responsible in keeping their building safe and up to date with constantly changing regulations and safety advice?

I too believe that building owners should pay to fix their buildings, just like you were and did.
In very basic terms - I'm no expert! - this is different from your asbestos situation because of leasehold law and individual lease variations.

Sue Bright has written an excellent article about it: https://www.law.ox.ac.uk/housing-after-grenfell/blog/2019/02/part-1-building-owners-and-cladding-problem is a really thorough place to start as an answer to your question: "why doesn't the building owner just pay to remediate?" All her other "Housing After Grenfell" articles explain the legal complexity really well, too: (edit: link: https://www.law.ox.ac.uk/people/susan-bright - go to blog posts, or follow her on Twitter if it's TLDR!)

There are many instances where developers have not met regs at the time, though the buildings were signed off by NHBC (who have refused all related claims to date).

Inside Housing research found that by far the most common non-flammable cladding compliance issue is cavity barriers missing or incorrectly installed - not covered by current remediation funds - and in most cases where this has now been found after EWS1 checks, developer warranties have expired or the NHBC refuses to pay for all sorts of reasons. 
There is also a statute of limitations in the Defective Premises Act so building owners can't legally claim for these and other issues from the developers. 

We'll be able to access EWS1s soon and see just exactly many weren't built to regs following surveys (released today: https://buildingsafetyportal.co.uk/)

To avoid a complete national disaster where hundreds of thousands go bankrupt and however many burn to death, remediation needs to happen, and funding is required from somewhere.

Question becomes "who has some part to play in getting us to where we are now?" In compliant-at-the-time buildings:
-building owners, by law.
-govt, who changed regs and applied them retrospectively.
-developers, who knowingly opted for combustible materials when non-combustible ones were available.
+
*Most* leaseholders did sign a lease agreement that says they can be charged service charges, used for contributions towards repairs and maintenance, though the actual repairs and maintenance remain the responsibility of the building owner.

But who should pay?

And if Amendment 13 of FSB passes into law, leaseholders will be taken out of the funding picture by law, entirely. So then what?

It is a catastro-bleep of epic proportions and it isn't going to be easy or cheap to sort out, which is why simplistic arguments of "just pay the £80,000" are tiresome (not talking about you!)

I - unlike MHCLG it seems - am open to all ideas; the developer levy is just one example of a funding solution in use right now - Lord knows we'll need a few!

annetheman

GDB2222 said:

annetheman said:

GDB2222 said:

I'd disagree about one point. If the problem could have been solved by all the developers contributing 5% of their profits, then it would have been solved by now.

You mentioned that there are 3 million leaseholders with an issue. At an average cost of say £20k, that's £60 bn. 

Developers haven't contributed a %age of their profits because they haven't been asked to.

You are missing the point. Developers haven't been asked to contribute a %age of profits because it wouldn't make any difference. If the cost of the repairs is say £60 bn and a suitable %age of profits is say £100m, it's going to take 600 years to pay for all the flats.

It is one funding solution. Nobody said they should fund the entire thing. Like I've reiterated, it's a very complex situation and govt not responding to this as a viable solution when clearly many options will be needed is - interesting.

In Victoria, AUS, developers contributed half of the funds required. Who knows how much UK developers need to or should contribute for it to be as effective as it was there? 

Edit to add: an interesting article on just one of Barratt's developments which they are remediating https://www.roofingtoday.co.uk/70m-cladding-replacement-and-structural-bill-for-barratt/

Crashy_Time

Deleted_User said:

I can sympathise that it is a horrible situation for anyone to be in but I dont see why the developers who built the buildings should be held financially responsible.   They built according to government rules at the time. As long as they built them in line with those regulations and didnt cut corners then how are they to blame?  And as private companies how can the government force them to pay for something that isnt their fault?  

I had to pay £10k to remove asbestos from a property i bought.  I wouldnt expect the original builder to pay for that.  I had to rewire unexpectedly but I wouldnt expect the cost of this to be paid by a levy on electricians who wired properties decades ago using rules that were applicable at the time

you seem very well read on the topic so my genuine question is, how is this any different to any building owner being responsible in keeping their building safe and up to date with constantly changing regulations and safety advice?

Good question.