I am delighted that the Government has this week announced further measures to improve building safety and hold developers to account.
It is a basic requirement that people should feel safe in their own homes. Since the Grenfell Tower tragedy the government and the failings the inquiry revealed, the Government has worked to make buildings safe, protect leaseholders and to comprehensively reform the system so that such a tragedy never happens again. While progress has been made through the Fire Safety Act and Building Safety Act, some developers and building owners have still not stepped up to address issues, leaving leaseholders facing significant stress and costs.
The measures announced this week will make sure that developers contribute to fixing buildings, that building owners fix their buildings, that wrong-doers are held to account, and that leaseholders get some relief from high buildings insurance premiums.
The Government have now published contracts, following agreement from the largest housebuilders to fix all life-critical fire safety issues in buildings over 11 metres in England which they had developed or refurbished. This will legally commit developers to delivering on this: a commitment worth more than £2 billion that will protect and give peace of mind to leaseholders in hundreds of buildings.
Developers will be required to inform residents in affected buildings how they will meet their commitments. And they will be required to reimburse the taxpayer where public money has been used to make their buildings safe. While there is much left to do, the publication of the contract is a major step towards putting leaseholders’ minds at rest. Once developers have signed the contract, leaseholders and owners in affected buildings will benefit from a common framework of rights and responsibilities that will get buildings fixed without cost to leaseholders. The Government expects developers to sign the contract within the next six weeks, by 13 March. This includes every company that signed the pledge, as well as several companies that were invited to sign but regrettably failed to do so.
Using Building Safety Act powers, the Government will also bring into law a Responsible Actors Scheme in England. Developers will only be allowed to join and remain in the Scheme if they enter into and comply with the terms of the developer remediation contract published today. Any eligible developer that is not a member of the Scheme will suffer significant consequences: they will not be permitted to commence developments for which they have planning permission, and they will not be able to secure building control sign-off for buildings already under construction. Ultimately, we want the Scheme to capture all those who built unsafe buildings over 11 metres and should be paying to fix them.
Where firms have failed to do the right thing, the Recovery Strategy Unit in the Department for Levelling UP, Housing and Communities is pursuing these firms and taking action. It has spearheaded legal action against recalcitrant freeholders and is actively investigating the concerning conduct of various entities and individuals across the built environment, including contractors and construction product manufacturers. We will use every power at our disposal to hold them to account. Legal action has already started, and leaseholders have already secured the first successful Remediation Contribution Order.
The Government is encouraging others to use these new powers to challenge bad behaviour. It is also considering what further action is necessary to ensure homes are not held hostage by irresponsible asset managers.
On the issue of building insurance, the Rt Homn Michael Gove MP asked the Financial Conduct Authority (FCA) to review the buildings insurance market for multi-occupancy residential buildings. Their report highlighted serious issues relating to commissions and other payments being shared with property managing agents, landlords and freeholders by insurance firms, with such payments making up at least 30% of leaseholders’ insurance premiums on average and as high as 60%. The FCA also identified concerning obstacles faced by some leaseholders in trying to understand or challenge their insurance bills.
This is not acceptable, and as a result the Government has committed to take action to ban managing agents, landlords and freeholders from taking commissions and other payments when they take out buildings insurance, replacing these payments with more transparent fees. Over the coming year we will press insurance brokers, managing agents and freeholders to change these practices. We will arm leaseholders with more information, enabling them to better scrutinise costs, and also ensure they are not subject to unjustified legal costs and can claim their legal costs back from their landlord.
These steps will ensure that leaseholder insurance costs are fairer and more transparent and will rebalance the legal costs regime to give leaseholders greater confidence to challenge their costs.
I welcome continuing work by the insurance industry on launching a UK-wide scheme to reduce the most severe premiums for leaseholders in buildings with significant fire safety issues. The Government have stressed the urgency of this: leaseholders need this support now.
