A new amendment to the Levelling Up and Regeneration Bill with the potential to offer some reprieve amidst the building safety crisis is set to be debated in the House of Lords on Monday.
The Polluter Pays Amendment, advanced by the Earl of Lytton, aims to enhance the protections offered to leaseholders who are living in potentially dangerous conditions and facing high costs of remediation.
This comes as Michael Gove, Secretary of State for the Department for Levelling Up, Housing and Communities, last week warned cladding shareholders of “severe consequences” for those who do not bring forward a comprehensive remediation package.
While the Building Safety Act 2022 does provide a certain level of protection for those leaseholders that qualify for support, the legislation – and the response of certain lenders – has been widely criticised by conveyancers, many of whom subsequently ceased to act in leasehold transactions affected by the Act.
In any case, many leaseholders still lack support with remediation costs. Buy-to-let owners with more than three properties, enfranchised leaseholders, and those living in blocks below 11 metres are particularly vulnerable to these expenses.
The Polluter Pays Amendment provides for an alternative, “comprehensive” solution to the building safety crisis through making either the builder or developer pay in full if found by the government to have breached building regulations at the time of construction or fund via a wide construction industry levy if they can’t pay.
“This would protect leaseholders from all costs resulting from defective building practices. It would also eliminate commercial corner-cutting and prevent future catastrophes like the Grenfell Tower fire,” said those campaigning for the amendment’s adoption, adding:
“The Polluter Pays Amendment could also work to prevent a potential banking crisis, as many unprotected leaseholders are completely exposed to huge costs. The threat of lease forfeiture, which has historically been a very rare event, could become a far more common outcome for many buy-to-let and enfranchised owners, wiping out an entire lender’s security unless further capital is provided.”
In presenting the amendment to the Lords, the Earl of Lytton will say: “The simple truth is the government does not have the money to solve the problem and is at present unprepared to place the responsibility on the wealthy construction industry that has created this over decades of marking its own homework. The proposals I am advancing would resolve this.”
Alison Hills, solicitor and campaigner for the Polluter Pays Amendment, summarised the issues facing leaseholders – and the amendment’s solutions – in this thread. Analysis from Daniel Greenberg CB, parliamentary counsel with 35 years’ experience and now Parliamentary Standards Commissioner and the draftsperson behind the amendment, is available below.
Legal Analysis of the Earl of Lytton’s #PolluterPays Building Safety Remediation Scheme drafted by Daniel Greenberg CB, parliamentary counsel with 35 years experience and now Parliamentary Standards Commissioner. It’s also backed by another experienced KC and solicitor… pic.twitter.com/ljD82XSxjV
— Polluter Pays (Levelling Up Bill) (@polluterpaysbsb) April 15, 2023
