On Monday 1st March, End Our Cladding Scandal campaigners had a meeting with Lord Greenhalgh and officials from the MHCLG building safety team.
As you can imagine, we had a packed agenda, with many questions. Unfortunately, we didn’t get many clear answers. Below are the key points from our meeting. We have requested minutes from the meeting for us to be able to properly track the actions; these are still awaited. One of our main frustrations relating to the meetings we’ve had with the MHCLG civil servants is that we have been promised documented actions for over six months, but these have not been forthcoming.
Following our meeting with Lord Greenhalgh on 5th January, we wrote to him and the MHCLG civil servants to discuss changes in the way the meetings are run and their outputs – we felt this was particularly important given the inconsistent messages we had been given in 2020. Read our email for more information.
Our next meeting is scheduled for Thursday 1st April.
Building Safety Fund
We asked why the rate of processing applications had slowed down and leaseholders were having so much difficulty getting accurate information from MHCLG / Greater London Authority (GLA) / Homes England (HE).
We were told that applications were being processed and delays were usually due to the applicant not submitting all the information required to process the application. We queried this response and identified issues with example of buildings and noted our view that there seemed to be inconsistencies depending on the allocated caseworker.
We also noted that there did not seem to be sufficient lessons learned from the delays to the ACM Fund application and the two-month registration period last year had caused a lot of worry at buildings that did not know if issues were present but had to register prior to being able to progress activities such as height measurements and external wall surveys.
We said that the requirements for the applications were still very onerous – our concerns remained that the process was still not fit for purpose to properly increase pace, and this was clear from the limited funds actually allocated to private buildings to-date.
We reiterated that there needed to be more and better visibility for the leaseholders and that the email address given for updates was only for the Applicants rather than leaseholders.
We asked about any changes to State Aid rules post-Brexit.
The response was that this was being reviewed and, for now, the State Aid rules still applied.
We asked whether the announced £2bn ‘developer levy’ would generate funds on top of the £5.1bn fund announced in Parliament last week.
We were told that it was not the case. The levy would be to offset the overall cost, so in real terms and as things stand, Government will only be providing a net figure of £3.1bn for cladding remediation of buildings.
We asked whether the Funding Agreement was due to be reviewed and/or simplified given the numerous queries raised on the clauses in the contract.
The response was that the gagging clause was clarified by Robert Jenrick, but we noted that this was still present in the contract alongside other unclear clauses that were open to interpretation to the detriment of leaseholders, and we had emailed MHCLG in January on this for clarification without receiving a reply.
We reiterated that we must have minutes of the meeting to properly track progress and we were advised that notes would be added by MHCLG to the Agenda we had sent and then returned to us. This remains outstanding.
We explained that, despite Robert Jenrick’s statement to Parliament, any loan scheme would create a major negative equity risk for flats as the overall cost of the loan would be discounted should a flat be put up for sale, and that market forces would prevail.
We said that this would mean a significant loss of value for properties and that it would most dramatically impact properties in the North of England, leading to forfeiture and bankruptcies. We asked if there had been an impact assessment for the loan scheme and how this had been conducted given the lack of data for buildings below 18m.
We were told that the loan scheme would actually return values to flats as such flats were now deemed valueless. We asked whether this had been reflected to UK Finance & The Building Societies Association as valueless flats would likely have an impact to mortgage lenders’ capital adequacy. Our concerns were dismissed.
We asked how the loans would ‘free up’ the housing market, particularly as there were many safety issues that would still need to be funded by the leaseholder. We didn’t get any answer.
We were told that the loans would not go on for longer than the lease, but we were not provided with details on how this would work in practice. We stated that compounding interest would materially extend the loan lifetime beyond lease lengths (and lifetimes).
We explained that paying increased insurance, waking watch costs, remediation costs for non-cladding issues was already unaffordable, so repaying a monthly £50 for cladding remediation on top of those costs (as well as our mortgages, service charges and ground rent) would absolutely not make the overall cost more affordable for anyone.
We asked why there was no proper help for buildings under 18m and nothing at all for building under 11m. We emphasised that building height was not the only risk factor to consider and noted the devastating fire at Richmond House, which confirmed the arbitrary nature of the height threshold.
We also mentioned the comments made by MHCLG official Brian Martin in a speech in 2018 and how the 18m figure was not apparently based on any evidence.
We were told that 18m had always been used historically and that this reflected the expert advice.
We highlighted the unfairness of this approach as it meant some buildings over 18m in a development would receive funding but others just under 18m would not, and we gave examples to illustrate this.
The response was that this scenario was something that could be looked at.
We reminded the Government of Robert Jenrick’s statement to Parliament on 20/01/2020 about height being a crude factor and that he would commission a sophisticated matrix of risk to be developed. We asked when the holistic approach to risk assessment would be available and noted that the only Advice Note since 20/01/2020 was the confusing information released on 21/11/2020, which seemed to be aiming for a more risk-based approach to remediation (i.e., to suggest risk mitigation for buildings instead of full remediation) but that this was not filtering through to the market yet.
We also said that it was unfair that an 18m building with a small decorative strip of combustible cladding at the top would receive funding whilst a 16m building built using timber and requiring full remediation, costing tens of thousands per leaseholder, would not.
We were also told that the RICS consultation should help progress a risk-based approach and there would also be a Publicly Available Specification (PAS) that should also help.
We noted that UK Finance and the Building Society Association (BSA) had already said MHCLG’s Expert Panel should confirm interpretations of risk, and we repeated the call that had been made for the Feedback Statement on the Risk Prioritisation Call For Evidence to be released by the Government.
On cladding historic fire safety defects
We re-stated the reported figure of 70% of buildings with unsafe cladding that also have non-cladding defects (balconies, walkways, unprotected steel, internal compartmentation) which professional fire engineers have advised must be remediated and that without funding to do this, most properties would remain unsafe and unsellable even in the event that cladding is removed.
Lord Greenhalgh repeated the suggestion that we look at warranties, legal action against developers etc. which many of us know are not an option for most leaseholders, not least because they are time barred.
We suggested that the Government should ensure there was a proper risk-based approach, and that alarms and sprinklers/fire suppression systems should be funded. We noted that sprinklers were now mandatory in all new buildings over 11m and that this was for clear safety purposes, so why were old and unsafe buildings not helped with funding for these risk mitigation measures that would actually reduce the overall funding requirement for full remediation. This request was ignored.
We also asked why no action was being taken against the wider construction industry that was also at fault, and we noted numerous examples from the Grenfell Tower Inquiry, where Kingspan’s behaviour was revealed to have been fraudulent in respect of safety tests. We noted that it was very unfair that leaseholders would have to pay to have dangerous Kingspan insulation removed from their buildings if it was behind brickwork, and we queried why the Government was not taking further action to help people by, e.g., providing funding now and looking to claim this from companies such as Kingspan at a future date.
Lord Greenhalgh said he had noted the large margins enjoyed by such product manufacturers and he wanted to look at this. We asked about timescales, but we did not get any firm answer on what action would be taken and when.
On rocketing insurance costs
We asked for an update about the long-promised roundtable meeting and whether MHCLG has considered the Association of Residential Managing Agents (ARMA) and Institute of Residential Property Management (IRPM) proposed insurance solution – where Government would be the insurer of last resort above a given threshold.
Lord Greenhalgh confirmed the roundtable with the Association of British Insurers (ABI), which we had asked for many times over recent months, would take place on 11th March.
We also noted the recent comments by James Dalton, Director of General Insurance Policy at the Association of British Insurers, on how a public/private partnership could be established to help leaseholders. We stated our view that this seemed to be a direct suggestion for intervention and that the Government was now intending on helping with a state-backed Professional Indemnity Insurance scheme, so it seemed very unfair that innocent leaseholders, who are now being forced to pay thousands of pounds, were not also being helped.
Lord Greenhalgh said that the Building Insurance team was still looking at options.
We said that it was past time to look for options and that a solution could be something as simple as Government agreeing to intervene to pool the risk and pay out for any incidents. We noted that Lord Greenhalgh had mentioned the scarcity of fires and that this scarcity should surely mean a resolution to the soaring insurance costs we face could be found.
We expressed our deep concern and frustration that we had raised this issue numerous times over the last six months, and had given many examples to the Government, both directly and indirectly, but we felt we were not seeing sufficient progress.
MHCLG said they were taking the issue seriously and understood the pain residents were going through.
We also noted that Treasury was benefiting from increased premium through the 12% Insurance Premium Tax.
Waking Watch Relief Fund (WWRF)
We asked about Greater London funding opening given other regions had been able to apply to the WWRF for over a month. We also queried the speed of funding release as many buildings would pay more in waking watch costs whilst they wait for funding than the actual fire alarm would cost.
The Minister confirmed that the Waking Watch fund would unfortunately be granted on a ‘first come, first served’ basis and that London leaseholders will only be able to apply to the fund from mid-March.
We reiterated our frustration at the minimal amount available for help to install alarms and replace the Waking Watch and that the Treasury would easily receive over £30m per year from solely VAT on Waking Watches given the massive number currently in place across the country.
We repeated our request for representatives of HM Treasury to join future meetings, but we were not given any assurance that this would actually happen.
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