Following the Grenfell Tower tragedy in 2017, both the Fire Safety Bill and the Building Safety Bill are anticipated to come into effect early in 2021. One of the most contentious issues relating to the new legislation has been the issue of who should pay for the associated remediation costs.
Who should fund fire safety remediation costs?
In a significant victory for Labour and Liberal Democrat, the House of Lords has agreed three amendments to the draft Fire Safety Bill - the most notable of these relates to the funding of the remediation costs and is set out below.
Prohibition on passing remediation costs on to leaseholders and tenants
(1) The owner of a building may not pass the costs of any remedial work attributable to the provisions of this Act on to leaseholders or tenants of that building.
(2) Subsection (1) does not apply to a leaseholder who is also the owner or part owner of the freehold of the building.
Baroness Pinnock explained the rationale for this amendment:
"…. who was responsible for including these dangerous cladding panels in the first place? The construction companies surely have some responsibility. The warranties that were provided on the building should surely cover errors made during construction. The people who do not have any responsibility are those currently being asked to pay the bills. This is not just and not right, and we have an opportunity today to take the first step towards removing the anguish and anxiety faced by homeowners and tenants in this position".
The Government's objections to the amendment are, in summary:
- this blanket prohibition would close of one of the avenues of funding for these crucial remediation costs;
- it would stop all remediation costs being passed on to leaseholders including routine wear and tear costs that would normally be covered by the service and maintenance charges; and
- the fire safety order is not the appropriate legislative framework to resolve remediation costs - any such provision should be covered in the Building Safety Bill.
On the Government's plans for the funding, Lord Greenhalgh, Minister for Building Safety and Communities stated: "... we have already committed £1.6 billion to fund the removal and replacement of unsafe cladding on high-rise residential buildings, and we have been putting pressure on building owners to step up to the plate, as well as using warranties and recovering costs from contractors for incorrect or poor work". He went on to confirm a commitment to updating the Government's position on remediation costs when the Building Safety Bill returns to Parliament.
A date for consideration of the Lords' amendments to the Fire Safety Bill by the Commons has not yet been set.
We will keep you updated on developments in this area.