12/02/2021

Misc – possession and mediation, money and remediation

The HMCTS mediation pilot on possession claims started on 1 February 2021, with the idea that it will ease the backlog of possession claims in the county courts by allowing resolution of landlord and tenant disputes outside of the full possession process.

I’m on record as something of a sceptic as to the efficacy of mediation in resolving the kind of issues that lead to possession claims. I have doubts about both whether these are the kind of cases that mediation might resolve, and about an emphasis on mediation over access to justice, where at least one and possibly both parties do not know their legal rights.

Having seen the proposed process, I remain, if anything, even more sceptical. This is from an HMCTS email explaining the referral process:

Referrals to the pilot can be made on the date of the Review and are suitable for cases where the Defendant has engaged with the Duty Advisor for advice at the Review but an agreement has not been reached and the Duty Advisor thinks the case may be suitable to mediate. Both parties will need to consent to mediation and once a referral is made, the Mediation provider will be in contact with the parties to arrange the mediation. This pilot will provide the parties with a valuable opportunity to resolve disputes before a formal hearing takes place and agreeing to mediation will not make the court possession process take any longer but will help to resolve issues and sustain tenancies wherever possible.

So, no agreement by consent has been reached at the Review date, but the duty advisor thinks mediation may reach resolution AND the landlord agrees to mediation. Well, open the floodgates…

Apparently £3 million of funding has been thrown at this pilot. I wish it well, but suspect it will be a bit of an Icarus. Meanwhile in housing civil legal aid terms, £3 million is a lot of money…

(The Law Society is also somewhat sceptical, it seems.)

While on the topic of throwing some money at the wall in the hope that a problem will go away, there was the Housing Secretary of State’s ‘extraordinary intervention’ on Wednesday, in an effort to buy off backbench rebels on the cladding/fire safety crisis costs landing on leaseholders.

What this amounted to was:

  • An additional £3.5 billion to the Building Safety Fund to fund remediation of dangerous cladding (and only cladding) on buildings of 18 metres plus (or over six storeys – not entirely clear)
  • A plan for low cost loans for cladding removal (and apparently cladding only) for buildings between four storeys and six storeys, which would mean repayments of up to £50 per month from leaseholders, but with that passing on the lease, not as an individual debt for the current leaseholder.
  • A tax on developers, and an additional levy on development of taller buildings, expected to raise a whole £125 million a year. (We might note at this moment that in the three years since Grenfell, the top five developers made £10 billion in profits between them, aided largely by the billions the Govt threw into ‘help to buy’, which inflated new build prices accordingly and will be repaid by… those purchasers.)

And that is it.

There are a lot of reasons why this wizard wheeze won’t work – as in it won’t get works done, it won’t get buildings made safe, and it won’t stop affected leaseholders being furious. Here are just a few of them.

There are very few buildings, whether over or under 18m height, where the problems that have emerged are solely the wrong cladding. Anecdotally, nearly every affected building also suffers from other fire safety defects to the structure – missing fire breaks, inadequate cavities, dangerous insulation material, and compartmentalisation failures are common and not the only problems. These are build defects with the construction of the building, but mostly not discovered until intrusive investigations around cladding or for an EWS1. The costs of remedying these other defects are running into multiples of tens of thousand pounds per leaseholder. These costs are not covered by the ‘extraordinary intervention’ at all, for any height. The simple point is that where leaseholders cannot afford these costs – often the case – the work will not be done and the buildings will remain unsafe.

We don’t know in any detailed way how many leaseholders of 18m plus buildings are facing cladding costs only. We don’t know this because, astonishingly, the Government has not carried out any investigation at all into the numbers of affected buildings and what issues those buildings face. The Govt literally has no idea about the scale of the fire safety build defect problem and has not tried to find out. However, from media and leaseholder reports, the number of buildings where the only problem is the cladding is small. So the number of leaseholders of 18m plus buildings who will not have to pay remediation costs because of this ‘extraordinary intervention’ is also likely to be small. That is even before we take into account the additional service charges for waking watches and increased insurance premiums that these leaseholders are highly likely to have already faced.

For those in below 18m buildings, the ‘loan’ proposal is worrying. Not only is it for cladding costs only, exposing the leaseholders to all the other costs of remedying fire safety build defects as above, but it will apparently be a loan/cost levied on the lease. It is not at all clear how this will work, but my guess would be a loan to the freeholder, with legislation enabling recovery of the loan through the leases at a rate of up to £50 per month. What this will mean in practice of course is that a leaseholder looking to sell an impacted lease will be asked by buyers to discount the sale price to at least part and probably all of the value of the loan repayments, even – or particularly – if those £50 per month payments might be over a period of 80 years or so (which is eminently possible on some of the non-cladding charges that have already been demanded). Plus, how does this work if the repayment term is longer than the lease? I suspect the Secretary of State can’t tell us, because it wasn’t on the back of the fag packet. That said, the SoS did have the chutzpah to say the loans would not impact the value of the lease, to which the only answer is ‘what planet are you on?’.

And of course, the waking watch, additional alarms and increased insurance premium costs all fall on leaseholders for four-six storey buildings too.

For those in building of under four storeys, well, tough. Pay up.

The distinction between 18 metre plus and below 18 metre makes no sense. The Secretary of State, Robert Jenrick, defended it as being based on independent expert advice. No-one knows who advised that, as fire safety experts basically say the issue is the risk level of the building, not the height. In fact, Robert Jenrick, the Secretary of State, completely agreed that this was so in January 2020, when introducing the new building regs advice note that extended ‘non combustible’ external wall requirements to buildings below 18m.

Jenrick height

Well, quite so.

And lastly, simply because it annoyed me intensely, in an answer to a question following his announcement of the ‘extraordinary intervention’ in Parliament, Jenrick said this:

Jenrick fibs

This goes well beyond political exaggeration and into the realm of full blown gaslighting. This Govt (and its predecessor) has done nothing what so ever to support leaseholders to pursue claims. Nothing, Niente, Zero, Zilch, Nada. In fact the only thing it did do was propose to remove even the faint possibility that civil claims for breach of building regulations might one day be possible in the Draft Building Safety Bill (we will see what makes it into the actual Bill).

So, the simple answer is that Jenrick’s ‘extraordinary intervention’ won’t work. It won’t ensure buildings are made safe – the primary and most urgent concern – because that will still rely on leaseholders being able to pay, and given the sums involved, they can’t, so it won’t happen.

It will not return the property market in new build flats to functionality, for the same reason, and because loans will inevitably impact sale prices and put people effectively into negative equity for a debt which isn’t theirs.

It will not protect leaseholders from huge costs for problems for which they are not responsible and about which they could have had no prior knowledge. (I can’t believe Jenrick actually cited caveat emptor as the default position in one of his answers in the announcement.)

It does not recognise that a large part of the problem has been an utter failure of building regulation by successive governments, since at least the mid 2000’s, but in particular in the complete failure to respond to the Coroner’s recommendations from the Lakanal House fire inquest report in 2013. That might not be this Govt’s fault, specifically, but it is a failing of government, and it falls to this government to address it.

Cometh the hour, cometh the man. Unfortunately, that man is Robert Jenrick.

 

 

 

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts.

4 Comments

  1. Serdar

    How much did disrepair legal aid cost annually pre laspo. Surely bringing disrepair fully back into scope would have been a better use of the money than a possession mediation pilot.

    Reply
  2. Gary Webber

    Giles, it is a pity that you are being so negative about mediation, which can work in all contexts. It is true that most councils and social housing organisations manage to negotiate outcomes with their tenants without the need for a third party assisting but there are many situations, especially in the private sector where mediation could be very beneficial. At the end of the day this is a pilot so why not see if it works? Mediation does not prevent access to justice. The email you quote makes that clear and of course a consent order for possession cannot be made without judicial scrutiny. Incidentally there is a private sector mediation scheme for possession claims. I don’t know what the take-up is.
    https://www.adrodrinternational.com/possession-claims-mediation-scheme

    Reply
    • Giles Peaker

      Hi Gary. I’m not negative about mediation in general. I have been in some very successful mediations. I am sceptical about its utility and indeed likely take up in the context of live possession claims.

      Reply
  3. Colin Todd

    Using the 18m cut off is a good start, I would have to admit. However, Ministers are too dim to understand that there are more fires in high rise than in low rise because there are more flats! Duh! There are also more fires in tower blocks because not many ministers or lawyers live in inner city tower blocks. Fire frequency is strongly linked to deprivation. I do a whole lecture on that subject. But those fatalities that the minister rabbits on about are people who die in their own flats because of a fire in their own flat, not because of someone else’s fire. Grenfell was an obscene anomaly in that respect. The only reason to sort out cladding on high rise is because of the greater population at risk and the longer time for escape. its nothing to do with fire stats on deaths and injuries.

    Reply

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