Marisa Abrahams (Legal Director) and Claire Lamkin (Partner) are in the real estate & construction team at law firm Kingsley Napley
Whilst the housebuilding side of Angela Rayner’s new role of Secretary of State for Housing, Communities and Local Government has garnered headlines in the first week of the new Labour Government, changes to section 117 of the Leasehold and Freehold Reform Act 2024, which are due to take effect on 24 July 2024, may bring the issue of cladding and building remediation costs to the top of her inbox sooner than she may have expected.
Building safety measures following Grenfell were not one of the central tenets of Labour’s election campaign.
A ‘national cladding taskforce’ was called for in 2021 by Keir Starmer in order to identify potentially dangerous buildings and remediate them. There was discussion by Labour in the same year of the idea of creating a building works agency which would assess buildings, remediate them and provide certification. However, following Michael Gove’s measures to get developers to engage in funding remediation post-Grenfell, Labour have not raised this idea again, instead choosing to criticise the speed at which the Conservative’s strategy on mediation contracts has progressed.
Labour pledged to speed up the pace of remediation works and to make sure that no leaseholders and ordinary taxpayers were burdened with the costs of making their buildings safe. Hence it will be very interesting to see their response on s117.
The recent changes to s117 of the Building Safety Act that are being introduced by the Leasehold and Freehold Reform Act 2024 in less than 2 weeks’ time could lead to leaseholders being saddled with additional costs. This is because the newly amended section will enable Right-to-manage companies (RTMs) and Resident management companies (RMCs) to recover their costs incurred in seeking remediation contribution orders, from leaseholders through the service charge (assuming there is a costs recovery clause in the lease).
This clearly flies in the face of Ms Rayner’s earlier position on unfair costs.
Separately, we also understand that the already extended deadline for approved inspectors to obtain certification from the Building Safety Regulator will be missed in terms of date and target numbers with many still awaiting certification leading to a current shortage of building control inspectors. This will present a further challenge to the new government in seeking to honour its pre-election commitments.
Some commentators have called for Labour to prioritise a centralised response on all of these issues beefing up the powers of the new building safety regulator, to enable them to hold developers, cladding suppliers and contractors to account.
Without doubt those in the industry as well as leaseholders will be watching any political developments on all of these fronts closely going forward.
A final thought – Labour had previously pledged to abolish the leasehold system entirely. However, as it stands the Leasehold and Freehold Reform Act bans new houses only (not flats) being granted as leasehold; much more limited scope than Labour’s pledge. Most elements of the Leasehold and Freehold Reform Act are only expected to come into force in 2025/6. It remains to be seen whether Angela Rayner will pick up the mantle again for the implementation of commonhold tenure as an alternative to leasehold.
