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

annetheman

And an update from 2 weeks ago I forgot to share:

https://www.rics.org/uk/news-insight/latest-news/press/press-releases/new-consultation-as-guidance-aims-to-improve-consistency-in-ews1-requests/

EWS1 2.0 awaits us - RICS is collating consultations about their improvements to the elusive EWS1 forms. The purpose would be to take many (not the majority but a lot of) buildings out of scope.
Worth noting:

• Lenders are currently asking for EWS1 1.0 on buildings <18m, even maisonettes and bungalows.
• Lenders are aware that combustible cladding is only a small portion of the causes for EWS1 B2 ratings, with compartmentation/lack of fire breaks/flammable insulation causing more non compliance issues than combustible cladding
• Only an intrusive survey by a trained fire safety engineer will allow assessment of the external wall system's compliance with fire safety standards since the above components are not visible without one
• So they will continue asking for intrusive surveys.... i.e. EWS1 where they are not required.
• Round and around we go

Really, the cat's out of the bag. Lenders and insurance KNOW 90% of buildings fail EWS1 surveys and saying "you don't need to test these ones now" isn't going to satisfy their requirement to confirm the property they are lending against is sound.

I imagine it might mean *some* very low risk buildings that were never in scope might pass by unscathed but I don't see this making a significant difference now.

I applaud their efforts though - at least they (RICS) are trying to find a solution.

annetheman

UPDATE: MHCLG have today announced a new regulator will come into force to govern building practices to "stop another Grenfell from happening". 3.5 years after Grenfell.

https://www.dailymail.co.uk/news/article-9161307/Heads-companies-make-dangerous-products-used-build-homes-receive-harsher-punishment.html?ito=amp_twitter_share-top
*slow clap for more shutting of stable doors after the horse has bolted*

I am of no doubt that the only reason they have announced this, as well as as the fact they are "considering" banning the likes of Kingspan (makers of Grenfell's K15 flammable insulation; Kingspan insulation is on virtually every residential flat building in the country and most houses) and Arconic (makers of the flammable ACM cladding panels) from govt contracts in future, is to deflect from underhand plans to give leaseholders 30-year loans to bail out Tory donor developers/insurers.

Firm directors also face prison for flouting building safety regulations.

Fantastic news however
-90% of buildings still require remediation.
-Most remedial work is NOT due to cladding but due to flammable insulation (see Kingspan above), lack of firebreaks and incorrectly installed cavity barriers. 
-All the above are not "new" post Grenfell regulations, they are illegal defects in the original billed found through intrusive surveys.
-Govt still aims to pass the Building Safety Bill, which will make leaseholders liable to pay for historic defects in the buildings they live in (and do not own) caused by builder negligence and in SOME cases retrospective application of regulations
-Payment from leaseholders will be due in 28 days from invoicing as per the Building Safety Bill.
-McPartland Amendment gaining more and more Tory backbencher support, with an uprising predicted by the press.
-National newspapers now running the story on the front pages; can no longer be swept under the rung.

-The sudden recent action from MHCLG (announcement of the new regulator, discussion of a levy by MHCLG for the first time etc), is clearly a direct attempt at placating the growing opposition to the Building Safety Bill placing ALL costs of fixing builder negligence and fixing building owners' defective buildings at the feet of leaseholders and forcing them to pay via 30-year loans attached to gag orders.

All this action is a deflection, the levy won't touch the sides. Many CAGs and cross party EOCS supporters see through it and still demand the McPartland amendment is implemented.

Please ask your MPs to add their name to the McPartland amendment!

Crashy_Time

Might have guessed that some kind of loan would be the central plank of their thinking.

annetheman

Crashy_Time said:

Might have guessed that some kind of loan would be the central plank of their thinking.

Yepp. Leaseholders/CAGs are hearing that:

• Michael Wade (insurance tsar tasked with finding "affordable" - no definition given from Greenhalgh yet - financial solutions for leaseholders) WILL force loans on leaseholders by proxy.
• Loan will be positioned as a loan to the freeholder or building management company. 
• The govt will tell freeholders and building management companies that they really shouldn't pass the charges onto leaseholders. 
• But won't legislate against it. 
• Service charges at any of the affected properties will go up by £1000+ minimum per year per leaseholder, with interest, over 30 years. Costs could increase at any point during remedial works.
• MHCLG will propose that the draft Building Safety Bill's Building Safety Charge's inclusion "gives leaseholders transparency and allows them to challenge the costs better" and impose MORE costs through that.
  

The McPartland Amendment would mean the above is not possible - it would make freeholders passing on the costs of these loans and any other cost associated with remediating historic building safety defects illegal!

It's being debated in the House of Commons TONIGHT at 7pm for the first time:

https://parliamentlive.tv/Event/Index/63b12edb-9f6a-4438-8a0e-5910e245c1c2

Watch this space...

Crashy_Time

Interesting.

annetheman

McPartland Amendment Adjournment Debate tonight was cancelled due to 'technical issues'.

Hmmm. Convenient after the uproar this week!

Stay tuned for the next update.......

annetheman

Another Sunday, another week without any meaningful movement from central govt to resolve EWS1 flat sales mess caused by AN14 - except 1 update:
Honest Bob Jenrick confirms MHCLG have appointed a new department whip, North Cornwall rep Scott Mann. Could it by any chance have anything at all to do with the reports of a growing backbench rebellion against the Developer Absolution Bill Building Safety Bill, with new co-signers to the McPartland Amendment confirmed every week?
https://www.telegraph.co.uk/property/uk/government-pressure-conservative-mps-save-homeowners-cladding/
https://www.insidehousing.co.uk/news/news/wave-of-conservative-mps-back-amendment-to-protect-leaseholders-from-cladding-costs-69123

The numbers are still not there yet - at least 100 Tory MPs have to vote for the McPartland Amendment when it comes to parliament, if we take the Grenfell Inquiry amendments vote as indicative of how the party's will whip on this issue. Much work being done by CAGs and leasehold reform groups asking members and friends to write to their MPs - some with success, some with the same MHCLG copy pasta responses..

Until a date for the next debate is given, there's no indication of how big the rebellion really is.

Fantastic double-page spread in today's Mirror:
Sir Peter Bottomley: "It's much worse than the PPI fiasco... give us justice"
https://pbs.twimg.com/media/EsfFt_4XcAAMoeF?format=jpg&name=medium

Josquin

'Bozo  only selected people for his cabinet if  they'd do what they're told and support Brex****.  I'd not put Jenrick in charge of a whelk stall.

A strong PM has people who'd argue with them.

The most useless, damaging government of my life (I'm 72) who by their actions, inactions and stupidity have killed more citizens than any other government in my life.'''

I second that and third and fourth and to the xth term...

numbercruncher8

IMO it is genuinely quite easy to get the funds to fix. After all, we can print unlimited funds, it's just a matter of getting them back.

If developers remain on the hook for retrospective problems then that is a bit of a disincentive. Can we be quite certain that there is not something that is safe now but might not be in future with further informaton? In fact it may be reasonable to say that standards will change in future and some items will fall into disuse. You could insure against that, but that cost would be passed on in the service charge, which are high enough.

At the same time the taxpayer bailing out sets a bad precedent, essentially incentivising developers to take shortcuts in the knowledge that if they mess up they won't have to pay. In some of the cases, not up to current standards does not equate to unsafe.... this creates an onus to for taxpayers rather than developers to fix other things in future.

But it is clear some of the amounts quoted would be ruinous for residents. Allowing the costs to be passed onto them creates a massive disincentive for people to buy flats, as buyers may fear what may happen in future.

Some control needs to be taken over both ends, potentially companies could charge price-gouging prices. So government needs to control and standardise prices quite strictly to ensure no rip-offs.

The money part is more straight-forward. Developers could be levied a fixed amount per unit, owners could be levied a much smaller amount - 1% of property value would be mean someone in an old flat up North pays hardly anything compared to a luxury Central London location (even though they may cost similar to fix).

The shortfall would still be large, but an extra 1% stamp duty could be levied on flats. This would still take some years to reach the value of works but it would do after some time after which the monies could be held separately for future issues.

This seems an absolutely equitable and fair solution all around. Buyers might pay more in tax but would gain a better system where these standoffs are less likely to happen.

I know some people in this situation though and self-interest overrules logic. The less you owe the more likely it is you will not like something like this.

annetheman

numbercruncher8 said:

IMO it is genuinely quite easy to get the funds to fix. After all, we can print unlimited funds, it's just a matter of getting them back.

If developers remain on the hook for retrospective problems then that is a bit of a disincentive. Can we be quite certain that there is not something that is safe now but might not be in future with further informaton? In fact it may be reasonable to say that standards will change in future and some items will fall into disuse. You could insure against that, but that cost would be passed on in the service charge, which are high enough.

At the same time the taxpayer bailing out sets a bad precedent, essentially incentivising developers to take shortcuts in the knowledge that if they mess up they won't have to pay. In some of the cases, not up to current standards does not equate to unsafe.... this creates an onus to for taxpayers rather than developers to fix other things in future.

But it is clear some of the amounts quoted would be ruinous for residents. Allowing the costs to be passed onto them creates a massive disincentive for people to buy flats, as buyers may fear what may happen in future.

Some control needs to be taken over both ends, potentially companies could charge price-gouging prices. So government needs to control and standardise prices quite strictly to ensure no rip-offs.

The money part is more straight-forward. Developers could be levied a fixed amount per unit, owners could be levied a much smaller amount - 1% of property value would be mean someone in an old flat up North pays hardly anything compared to a luxury Central London location (even though they may cost similar to fix).

The shortfall would still be large, but an extra 1% stamp duty could be levied on flats. This would still take some years to reach the value of works but it would do after some time after which the monies could be held separately for future issues.

This seems an absolutely equitable and fair solution all around. Buyers might pay more in tax but would gain a better system where these standoffs are less likely to happen.

I know some people in this situation though and self-interest overrules logic. The less you owe the more likely it is you will not like something like this.

You are the first in a very long list of economists and risk experts to say this! I admire the confidence in your proposal but I can't agree with calling any proposed funding solution "easy" to execute!

I do agree levies form the most promising routes to funding. Former Bank of England economist Dr. Dean Buckner presented a very comprehensive funding solution which is based on a system of levies and govt bonds, I'd recommend you check it out: https://www.leaseholdknowledge.com/here-is-how-to-avoid-dumping-the-cladding-scandal-bill-on-leaseholders-or-taxpayers/ endorsed by the LKP and features in today's Sunday Times (again). Still no response from MHCLG.

You can watch him explain it here: https://www.leaseholdknowledge.com/full-appg-december-10-can-be-seen-here/ link to the Zoom presentation and password is in the article.
Edit to add today's Sunday Times feature: https://www.thetimes.co.uk/article/hidden-housing-scandal-who-will-pay-to-fix-fire-risk-flats-5xvtgjpcn

People are committing suicide and declaring bankruptcy; something has to give, very very soon.

I look forward to the inevitable public inquiry into this.