Polluter Pays Amendment seeks to reform building safety standards

The Building Safety Act 2022 currently provides leaseholders with varying degrees of statutory protection from the costs of cladding and non-cladding remediation as well as interim safety measures such as ‘Waking Watches’. This Act of Parliament emerged, of course, as a result of the Grenfell Tower fire in 2017, which exposed catastrophic failures in fire safety regulations and has left tens of thousands of people living in unsafe buildings.

Through no fault of their own, leaseholders have bee facing bills running into the tens, or even hundreds of thousands of pounds for the remediation of fire safety-related defects.

Many of those leaseholders still receive little or no protection from non-cladding remediation costs. Buy-to-let owners with more than three properties, enfranchised leaseholders and those living in tower blocks below 11 metres in height are particularly vulnerable to these expenses.

Alternative solution

The Polluter Pays Amendment, which is based on drafting by Daniel Greenberg (former Parliamentary Counsel and currently Parliamentary Commissioner for Standards) related to the Levelling Up and Regeneration Bill, provides for an “alternative and comprehensive” solution to the building safety crisis.

Under this amendment, either the builder or developer would have to pay any remediation costs in full if found by the Government to have breached Building Regulations at the time of construction. This underpinning idea is to protect leaseholders from all costs resulting to defective building practices. Further, the amendment would also eliminate commercial corner-cutting and prevent future catastrophes like the tragedy that occurred at Grenfell Tower.

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, potentially wiping out an entire lender’s security unless further capital is provided.

Pension funds that are invested in ground rent funds face significant unanticipated costs. In the worse case scenario, a thinly capitalised or significantly indebted landlord group could fail, with unknown consequences and costs the end result for hundreds of thousands of individuals if unsellable freeholds escheat to the Crown.

If the Government decides to implement this proposed amendment, a potential banking crisis and the suffering of hundreds of thousands of homeowners around the country could be prevented.

Global precedent

Ted Baillieu, the former State Premier of Australia, recognises this amendment as a “global precedent for cultural reform” in construction across the world.

“This amendment’s going to cover off everything,” asserted Baillieu. “Not just cladding, but rather all defects and all other costs. It establishes a principle that, if you don’t build according to the regulations in place, it doesn’t matter how long ago you did so. You’ll still have to pay to fix the situation.”

In his address at the Houses of Parliament, The Earl of Lytton will say: “The simple truth is that 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 situation across decades of marking its own homework. The proposals I’m advancing would resolve that situation.”

Advocates of the Polluter Pays Amendment have worked long and hard to educate members of the public on the need for changes to current safety standards.