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John Marr
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UK Finance
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UK Finance is the collective voice for the banking and finance industry.
Representing more than 300 firms across the industry, we act to enhance competitiveness, support customers and facilitate innovation.
We welcome the opportunity to respond to the call for views by the Local Government, Housing and Planning Committee on the policy provisions of the Housing (Cladding Remediation) (Scotland) Bill.
Representing more than 300 firms across the industry, we act to enhance competitiveness, support customers and facilitate innovation.
We welcome the opportunity to respond to the call for views by the Local Government, Housing and Planning Committee on the policy provisions of the Housing (Cladding Remediation) (Scotland) Bill.
Question 1
1. Do you think this legislation will deliver quick and cost effective remediation of potentially flammable cladding systems found on some modern blocks of flats in Scotland?
Please provide your response in the box provided.
While the legislation can reduce and address some of the barriers to delivery of the cladding remediation programme, there are a range of other factors affecting speed and cost-effectiveness of delivery which are outside the scope of the legislation. These are market-related issues primarily relating to availability/ cost of materials and labour as well as contractor availability and capacity.
2. What, if any, amendments could be made to the Bill that would further speed the delivery of cladding remediation?
Please provide your response in the box provided.
We have highlighted below the need for certainty and progress on key prerequisites for the programme to be delivered efficiently. These relate to developer contracts; single building assessment (SBA) scope/ remediation standards; evidence of costed/ funded remediation plans, and provision of mortgage valuations. Not all of these issues can necessarily or appropriately be addressed by the Bill, and some will require discussions/ negotiations to be progressed/ concluded.
Question 2
1. Do you think the Register will resolve the challenges around re-mortgaging, buying, selling, and insuring properties with potentially unsafe cladding?
Please provide your response in the box provided.
Buildings should be registered at beginning not end of remediation works programme
We have consistently advocated that making comprehensive information about a building’s remediation need and status publicly available will help to address uncertainty and reduce friction in the home buying and selling process as well as support homeowners wishing to remortgage.
While the introduction of a Cladding Assurance Register is welcome, it is important to keep in mind that a register, in itself, cannot not resolve all the challenges affecting the market arising from the need to remediate unsafe cladding. Rather, a register can help assure the market that required works have been identified, programmed and funded at no or minimal cost to flat owners.
The proposal is for a building to be registered once works identified as needed by the SBA have been completed.
We are strongly of the view that, to maximise potential for market assurance, buildings should be registered at the beginning, not end of the remediation works programme. Our view is that a building should be registered once:
• The SBA identifies need for works to address risk to life
• A costed and funded programme of remediation works has been agreed. This should include
o Any required consents from flat owners
o Indicative start and end dates for the remediation works programme
o Any interim fire safety measures required to maintain life safety before works have been completed (e.g. waking watch costs) with confirmation of funding source for such interim measures.
Our rationale for this view is that a programme of remediation works to a building could take some time to complete, meaning that market uncertainty could persist throughout the works programme.
Including a building on the Register earlier in the process could better enable flats in affected blocks to transact before or during a works programme, allowing owners to move on with their lives sooner rather than having to wait for works to be completed.
We have consistently advocated that making comprehensive information about a building’s remediation need and status publicly available will help to address uncertainty and reduce friction in the home buying and selling process as well as support homeowners wishing to remortgage.
While the introduction of a Cladding Assurance Register is welcome, it is important to keep in mind that a register, in itself, cannot not resolve all the challenges affecting the market arising from the need to remediate unsafe cladding. Rather, a register can help assure the market that required works have been identified, programmed and funded at no or minimal cost to flat owners.
The proposal is for a building to be registered once works identified as needed by the SBA have been completed.
We are strongly of the view that, to maximise potential for market assurance, buildings should be registered at the beginning, not end of the remediation works programme. Our view is that a building should be registered once:
• The SBA identifies need for works to address risk to life
• A costed and funded programme of remediation works has been agreed. This should include
o Any required consents from flat owners
o Indicative start and end dates for the remediation works programme
o Any interim fire safety measures required to maintain life safety before works have been completed (e.g. waking watch costs) with confirmation of funding source for such interim measures.
Our rationale for this view is that a programme of remediation works to a building could take some time to complete, meaning that market uncertainty could persist throughout the works programme.
Including a building on the Register earlier in the process could better enable flats in affected blocks to transact before or during a works programme, allowing owners to move on with their lives sooner rather than having to wait for works to be completed.
2. Are there any other measures necessary to respond to these challenges?
Please provide your response in the box provided.
Yes, there are key precursor measures necessary to significantly restore the market for flats in affected buildings. These relate to:
• Remediation funding certainty
• Certainty about the SBA, required remediation standard/ scope of remediation works
• Evidence of costed and funded remediation plans
• Provision of mortgage valuations
Remediation funding certainty
For developer-funded remediation, this requires developers to sign their long-form remediation contracts with Government, making the commitments previously given in letters legally binding.
Certainty about SBA, required remediation standard and scope of works
It will be important to be clear up-front about what the SBA covers, the scope of works and standard of remediation. This is particularly pertinent to developers. The legislative proposals and the SBA refer primarily to danger arising from external wall cladding systems. Yet assessment of a building’s external wall system by a fire professional could disclose internal defects giving rise to life-safety risk, such as compartmentation.
Our view is that, while these issues have been considered in detail through government-developer negotiations to date, there is still work to be done to resolve differences. This should be addressed urgently to avoid further delay to remediation programme delivery which prolongs uncertainty for home owners and the wider market.
The standard of remediation is also pertinent to insurers. While it is right that the immediate priority is preservation of life, it is also important to ensure that remediation standards preserve the property asset as far as possible. The risk of property destruction or major damage will impact insurance costs, which in turn will weigh on borrower affordability, valuation and lender appetite.
Ongoing collaborative work with government, industry and fire professionals will be needed to resolve these issues so that they can feed-in to the SBA scope and remediation standard.
Evidence of costed and funded remediation plans (up-front building registration)
Evidence should ideally include building details; when the SBA was undertaken; high-level description of remediation work required, indicative start and end dates, source of funds and the extent of any flat owner contribution (linking to the issue of consent). The proposed Cladding Assurance Register would be a means of helping to meet this requirement, noting our view (above) that building registration should be earlier in the remediation process rather than at the end.
In Wales and England, information such as this is available to valuers and lenders, and others involved in the home buying and selling process. It enables informed valuation and lending decisions to be made earlier.
Evidence of costed and funded remediation directly supports the Royal Institution of Chartered Surveyors’ (RICS) cladding valuation standard which enables mortgage valuations to be provided with certainty and consistency where remediation works have yet to commence but work programmes have been specified and funded.
Registering a building after works have been completed would mean the Scottish approach is out of step with that in Wales and England, to the detriment of home buyers and sellers who would have to wait until works are completed before having the required certainty to transact their properties.
Our view is that access to the Cladding Assurance Register should be free of charge, so as to maximise its use by home buyers and sellers and others involved in the homebuying and selling process. Free access would ensure the register is more likely to help reduce market friction.
Provision of mortgage valuations
A mortgage lending decision cannot be made without first having established the market value of a property. Once developer legal contracts have been signed (providing remediation funding certainty) and evidence can be provided of costed/ funded remediation plans (supported by the proposed register), then the RICS will be able to update its cladding valuation standard for Scotland.
• Remediation funding certainty
• Certainty about the SBA, required remediation standard/ scope of remediation works
• Evidence of costed and funded remediation plans
• Provision of mortgage valuations
Remediation funding certainty
For developer-funded remediation, this requires developers to sign their long-form remediation contracts with Government, making the commitments previously given in letters legally binding.
Certainty about SBA, required remediation standard and scope of works
It will be important to be clear up-front about what the SBA covers, the scope of works and standard of remediation. This is particularly pertinent to developers. The legislative proposals and the SBA refer primarily to danger arising from external wall cladding systems. Yet assessment of a building’s external wall system by a fire professional could disclose internal defects giving rise to life-safety risk, such as compartmentation.
Our view is that, while these issues have been considered in detail through government-developer negotiations to date, there is still work to be done to resolve differences. This should be addressed urgently to avoid further delay to remediation programme delivery which prolongs uncertainty for home owners and the wider market.
The standard of remediation is also pertinent to insurers. While it is right that the immediate priority is preservation of life, it is also important to ensure that remediation standards preserve the property asset as far as possible. The risk of property destruction or major damage will impact insurance costs, which in turn will weigh on borrower affordability, valuation and lender appetite.
Ongoing collaborative work with government, industry and fire professionals will be needed to resolve these issues so that they can feed-in to the SBA scope and remediation standard.
Evidence of costed and funded remediation plans (up-front building registration)
Evidence should ideally include building details; when the SBA was undertaken; high-level description of remediation work required, indicative start and end dates, source of funds and the extent of any flat owner contribution (linking to the issue of consent). The proposed Cladding Assurance Register would be a means of helping to meet this requirement, noting our view (above) that building registration should be earlier in the remediation process rather than at the end.
In Wales and England, information such as this is available to valuers and lenders, and others involved in the home buying and selling process. It enables informed valuation and lending decisions to be made earlier.
Evidence of costed and funded remediation directly supports the Royal Institution of Chartered Surveyors’ (RICS) cladding valuation standard which enables mortgage valuations to be provided with certainty and consistency where remediation works have yet to commence but work programmes have been specified and funded.
Registering a building after works have been completed would mean the Scottish approach is out of step with that in Wales and England, to the detriment of home buyers and sellers who would have to wait until works are completed before having the required certainty to transact their properties.
Our view is that access to the Cladding Assurance Register should be free of charge, so as to maximise its use by home buyers and sellers and others involved in the homebuying and selling process. Free access would ensure the register is more likely to help reduce market friction.
Provision of mortgage valuations
A mortgage lending decision cannot be made without first having established the market value of a property. Once developer legal contracts have been signed (providing remediation funding certainty) and evidence can be provided of costed/ funded remediation plans (supported by the proposed register), then the RICS will be able to update its cladding valuation standard for Scotland.
Question 3
1. Experience shows that it can prove difficult to secure consent for cladding remediation work from all owners within a block of flats. Do the provisions in the Bill adequately address this issue? If not, what changes need to be made?
Please provide your answer in the box provided.
It would be more appropriate for Factors and legal experts in property law to comment on this, but from our perspective the policy principle of simplifying the process of obtaining consent is welcome.
2. Are the appeal mechanisms and timescales for those appeals sufficient?
Please provide your answer in the box provided.
We have no specific comment on this aspect of the proposals but suggest that appeals should be considered and resolved promptly to minimise delay and uncertainty for a remediation programme.
Question 4
1. Do you think this scheme will expedite the process of remediating buildings with potentially unsafe cladding?
Please provide your answer in the box provided.
The proposed Responsible Developers Scheme will help support developer accountability, in line with the “polluter pays” principle.
2. Do you think it is proportionate to prohibit developers who fail to comply with the schemes terms from carrying out major developments and gaining building control sign-off in Scotland?
Please provide your answer in the box provided.
We suggest the proposed prohibitions, depending on detail, could be proportionate and consistent with the approach in the equivalent scheme in England.
Policymakers and legislators should be mindful of potential unintended consequences of applying developer prohibitions, which could include delaying or stalling off-plan sales, or mortgage offers expiring depending on when and for how long a prohibition is applied.
Policymakers and legislators should be mindful of potential unintended consequences of applying developer prohibitions, which could include delaying or stalling off-plan sales, or mortgage offers expiring depending on when and for how long a prohibition is applied.
3. Much of the detail of the scheme is left to secondary legislation. Should more of the detail be on the face of the Bill?
Please provide your answer in the box provided.
Scheme detail should be left to secondary legislation to allow flexibility for it to be adapted according to need and its practical effects in operation, rather than being locked-in to the primary legislation.
Question 5
1. Is there a need to make provision for non-residential buildings with potentially unsafe cladding?
Please provide your answer in the box provided.
This will depend on the extent to which non-residential buildings are affected by potentially unsafe cladding and the risk to life arising from their use and occupancy.
Scotland’s fire professionals will be better placed to inform and advise on this issue and whether additional provisions or powers are needed. It might be that widening the scope of the stock census could provide more data on non-residential buildings, however we would caution that the overriding priority ought to be residential buildings in scope and resources should not be diverted from this to other areas in the first instance.
Scotland’s fire professionals will be better placed to inform and advise on this issue and whether additional provisions or powers are needed. It might be that widening the scope of the stock census could provide more data on non-residential buildings, however we would caution that the overriding priority ought to be residential buildings in scope and resources should not be diverted from this to other areas in the first instance.