26th July 2021
As forecast in our Preview from 20 July 2021, the second reading did not involve substantive debate on the legal issues raised by the Bill. It did, however, indicate there is significant cross-party criticism of the Bill’s failure to fund remedial works for the benefit of leaseholders.
The Secretary of State, in his speech, described the Bill as providing a framework to ensure compliance with Building Regulations, with criminal penalties punishable by an unlimited fine and up to two years in prison. He also agreed to consider a suggestion that limitation under the Building Act 1984 should start running from the date of awareness of a defect.
The proposal to extend the period during which remedies under the Defective Premises Act 1972 may be claimed, from six to 15 years, was introduced but not debated in any detail. There are likely to be significant legal disputes about its retrospective application, as discussed in our 20 July 2021 note, along with the difficulty in finding solvent or insured entities to provide a remedy.
The response from Lucy Powell MP, Shadow Secretary of State for Housing, was typical of comments on this proposal:
Extending the period in which a developer can be sued is welcome, but residents in many buildings will not be able to take advantage. The relationship of leaseholders and developers is like David and Goliath. Legal action is uncertain, expensive and risky, requiring money that leaseholders simply do not have. It also requires that a company still exists to sue, yet many have disappeared. What is more, given what we know from the Hackitt report and elsewhere, in how many cases can all the blame be legally pinned on a developer, given the failures of the regulatory regime at the time? Very few, I would imagine.
Sir Peter Bottomley MP suggested that the Bill should:
…do two things: first, as I said to the Secretary of State during his speech, extend the Building Act 1984 so that people can make a claim within six years of knowing that there is a problem; and secondly, make sure that the insurance industry knows that it is ultimately liable for what the architects, designers, component suppliers, builders, regulators and building control groups have done and must get most of the money back by agreement. There is no point in having individual leaseholders, or groups of them, taking legal action; it will not work.
The remaining speeches broadly supported the principle of a levy on house builders or insurers, rather than remedies through legislative change that affects the relationships between building owners and leaseholders, developers, builders and professionals. The risks of litigation, as highlighted by Lucy Powell MP were repeatedly raised by speakers. Speakers also considered the value of the Ministerial Statement on building safety in medium and low-rise blocks of flats and the use of EWS1 forms.
Mr McPartland MP, the Conservative member for Stevenage, has told the Commons he will table amendments to apply the Housing Defects Act 1984 to cladding and fire safety defects. That would, he said, empower the Government and local authorities to provide funds to carry out remedial works. It will be interesting to see the amendments, when tabled, and also whether a proposal of this sort might garner cross party support.
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