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Leaseholders ‘should be reimbursed for cladding costs’

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Written by: Shekina Tuahene
11/03/2022
The government should reimburse the costs already paid by leaseholders to remediate cladding, while Buy-to-Let landlords shouldn't be hit with a fix bill, a group of MPs suggested.

Too many leaseholders were falling through the cracks of the government’s “piecemeal measures”, according to the cross-party Levelling Up, Housing and Communities (LUHC) committee.

The comments come after earlier this year, the government proposed that developers and manufacturers should pay for the remediation of buildings between 11 and 18 metres tall. It also asked developers to fund and undertake works on buildings they are responsible for. 

Leaseholders would be exempt from costs to fix unsafe cladding and a £10,000 cap on non-cladding costs (£15,000 for those in London) was proposed. While landlords with one additional property will also be exempt from paying, portfolio landlords could have to pay towards works. 

The ‘Building Safety: Remediation and Funding’ report stated that leaseholders, buy-to-let landlords and leaseholders of buildings under 11 metres in height were not to blame for the crisis.  

As such, it asked the government to scrap the cap on non-cladding costs and instead of applying a “piecemeal” method of funding depending on building height and type of defect, it should implement its previously recommended Comprehensive Building Safety Fund.  

Currently, an estimated £5.1bn bill has been proposed to remediate cladding on buildings 18m and above, and £4bn to remediate cladding on buildings 11–18m high. 

Protecting leaseholders and portfolio landlords

The committee said while the government has promised to protect leaseholders from future costs, it has not made any commitments to people who have already paid for works.  

Currently, any costs paid so far will count towards the proposed cap on non-cladding expenses including waking watch fees, insurance premiums are not included. 

The committee said: “As they stand, the government’s proposals create a bizarre lucky dip in which some leaseholders may see their costs capped at £10,000 (£15,000 in London); some, because they have not yet paid for cladding remediation, may pay nothing at all; and others, who have already paid for cladding remediation, will have paid well in excess of the proposed non-cladding cap.” 

It asked the government to table new amendments to the Building Safety Bill to ensure where polluters exist, they compensate leaseholders for costs already paid.  

Social landlords should be made eligible for building safety funds too, it recommended. 

The committee said buy-to-let landlords often could not afford costs and were no more responsible for the crisis and suggested making them pay for costs could drive rents up. 

It said excluding buy-to-let landlords could also delay remediation progress and asked to make them exempt from payments. 

Clive Betts, chair of the LUHC committee, said: “Leaseholders should not be paying a penny to rectify faults not of their doing in order to make their homes safe. Nearly five years after the tragic Grenfell fire, it is shameful this situation is yet to be properly resolved.  

“While we welcome Michael Gove’s commitment to fixing these issues, we are concerned there are gaps in the Secretary of State’s proposals which risk leaving leaseholders to pick up the bill.” 

The National Residential Landlords Association (NRLA), which gave evidence to the committee, argued it was completely unfair that individual landlords should be the only leaseholders not to be covered by government plans to finance the removal of dangerous cladding.

“We are delighted that the committee agrees with us. The government’s decision to exclude buy-to-let landlords renting more than one property from its scheme is unfair and unacceptable. As the committee rightly notes landlords are no more to blame than other leaseholders for historic building safety defects.

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