/ Home & Energy

We can’t afford £100,000 each to make our buildings safe

Leaseholders at Manchester’s Salford Quays could be hit with £100,000 bills each to remediate their buildings. Facing bankruptcy, the residents tell us their story.

This is a guest post by Jake Brammer. All views expressed are Jake’s own and not necessarily shared by Which?. 

I write this on day 10 of the second COVID-19 lockdown in England with the pandemic affecting mental as well as physical health across the UK.

For the residents of Millennium Point and Millennium Tower (Salford Quays), we have the added pressure of living through lockdown in a building we’ve been told could have fire-safety defects.

Those defects could potentially cost more than £100,000 per leaseholder to remediate.

Living in a building that could be considered a fire-risk keeps me up at night. The prospect of facing a £100,000 bill keeps me up at night too.

The threat of bankruptcy looms and, as I work in financial services, I would lose my job, my career and my home. My life will remain in lockdown after 2 December. It’s the same for the 200 flats making up Millennium Point and Tower.

Defective fire cavity systems

At the beginning of October, we were advised that we will likely need to fix the defective fire-cavity stopping system. Essentially, the fire-breaks/compartmentation had been found to be “undersized, poorly/incorrectly installed and generally in poor condition”.

To fix those defects, our compliant cladding and insulation (yes, you read that right – our cladding is compliant!) will need to be ripped off and either replaced or stored and then put back onto the building when the wider issues are remediated.

That’s why our potential costs are astronomical. And it gets worse – we’re told that neither building was fully compliant with regulations at the time of construction. You might think at this point we’d be able to claim under warranty but, as they were built in 2007, we may not have any recourse.

The original contractors and developers also all went into liquidation many years ago.

When buying our properties we all had surveys undertaken as part of the sales process. As surveys are not intrusive (going into the exterior walls of buildings), none of these issues ever came to light.

We would never have purchased these flats if a survey flagged what we now know.

Impact on our residents

Janet and Elwyn purchased their property so they could live next to the Lowry Theatre and have access to the Manchester nightlife they love so much. Elwyn cares for Janet and had to retire to do so.

All Janet and Elwyn wanted to do was live near the things that bring them so much joy – how can any leaseholders, especially retired ones, possibly deal with these bills?

Like Sam and Steve in London and Abi in Leeds, the defects that plague our buildings make them unsellable.

Adi, an NHS key worker, put his property on the market the day before we received the news. He spends his days on the NHS frontline, in the middle of a global pandemic, while facing financial ruin and the prospect of losing his home.

We have a number of key workers living here: it can’t be right that those people who have kept the country cared for this year could be facing homelessness.

‘The money just isn’t there’

The management company for Millennium Point and Tower applied for the Building Safety Fund on the day it opened. Given that our cladding is compliant, we don’t know if we qualify – the wording is so vague that we can’t even guess if we’re eligible.

Application is also complicated for us as there aren’t enough funds in reserve to pay for the works, so we won’t meet the 31 December 2020 costed tender deadline. The money just isn’t there.

Even if a miracle were to happen and we are eligible for funding, it may not be for the full amount and leaseholders would still be facing bankruptcy for any costs not paid.

No matter which way you look, the bills leaseholders could be facing across the country are crippling. We can’t keep going to bed at night not knowing if we’ll have a future.

We need help, we need a solution, we need to end this scandal.

This was a guest post by Jake Brammer. All views expressed were Jake’s own and not necessarily shared by Which?. 

Richard Anderson, Which? Corporate Reputation Manager:

This important issue is a consumer news story of major public interest, so we’ll be continuing to publish experiences like Jake’s here on Which? Conversation.

While Which? unfortunately does not have the expertise to be at the forefront of the issue, we expect – and certainly hope – that publicising these personal experiences will help to raise awareness and provide evidence for those groups and individuals advocating for solutions.

If you’ve been affected and would like to tell your story, please let us know in the comments.

Comments
Wimbledon resident says:
23 November 2020

This issue affects so many across the whole of UK yet the Government took over 3 years to notice it will not go away by itself. So many people live in fear – fire, safety, crippling bills, missed opportunities to sell and buy, to simply move on with one’s life. This whole saga is hugely taxing, mentally and financially.
More must be done!

Natasha says:
23 November 2020

I cannot express the stress and anxiety that this situation has caused – sleepless nights at the mountains of debt we all face. We need the Government to end this, now.

Hannah says:
23 November 2020

This is a total mess. The government need to understand what is going on here and make those accountable pay- or help us who bought in good faith. Unfortunately I’m sure there are many more crooks out there- should I even mention the local authority inspectors who signed these off?!

Give credit to the Government for the effective ruining of the building inspection regime. Removed from Council’s to become a privatised system. And with competing building inspection firms wanting repeat business from builders ….

I am familiar with a long-running campaign relating to converted warehouses in Bristol where the fire stopping had been omitted between flats and floors. The residents were ultimately successful after funding a legal case. My opinion is that this consumer champion has been very poor in highlighting problems with the most important purchase members ever make.

This covers the leasehold scandals, the poor finishing to new houses, missing insulation in numerous developments, and of course the housing industry having this pass on getting works
signed off.

So come on Which? explain why you have been so abasent from housing matters for the last two decades despite having at least one Trustee closely associated with the building industry for much of the period.

The legislation is typical of something rushed after a terrible incident, remember the Dangerous Dogs Act? Two immediate things the Government could do is raise the height of buildings so affected to something a reasonable person would understand as high rise. After all these building are not spontaneously combusting as we talk. That would take a lot of buildings out of the equation and as they are low rise are easily evacuated (and the risk of circumstances combining like Grenfell are already pretty low anyway). Secondly allow firms to train and apply (perhaps by license) to carry out the EWS checks. It is just one check amongst many and the current system is like insisting a surgeon must diagnose a broken ankle. This doesn’t help those people affected in the article unfortunately but if there were less buildings and more people to diagnose and do the work the cost would come down. It also occurs to me that there is a big legal issue here, couldn’t flat owner, under existing legislation, claim that their house is not fir for purpose or of merchantable quality and claim their money back under the sale of goods act? A class action in the making and even if firms no longer exist there is a thing called latent defects which allows the law to go deep.

James says:
24 November 2020

The trouble is that the genie is out of the bottle. This process has exposed that the building industry has been cutting corners for years and there are wide spread fire safety defects across the housing sector. EWS1 forms are not a statutory requirement, but are being asked by banks and other lenders. If they think buildings are fire risks and remediation has to happen – it doesn’t matter what the government says – and currently those costs sit with leaseholders. Leaseholders will also be at risk of higher insurance premiums. The only solution is for these defects to be rectified, otherwise there will be no consumer confidence in

If Which? cannot offer any help or advice to these unfortunate leaseholders then maybe they would be better off partnering with an organisation that can. I would suggest these leaseholders don’t want sympathy, they want routes to action to get them out of their financial and safety nightmares.

I see there is an organisation (?) UK Cladding Action Group mainly active on Twitter but no website as far as I can find. They appear to be fundraising so presumably are aiming to be active as well as reporting. Are they any good? Perhaps helping them get more of a presence would be a good way of helping the cause.

I’ve come to know the people being UKCAG well – they are doing a great job creating impact with the End Our Cladding Scandal campaign which can be found here: https://twitter.com/EOCS_Official

Many of the experiences published here I’ve worked with because of those campaigns helping connect me with people.

Richard has set out Which?”s current approach in detail both here and at the end of each guest experience we feature: https://conversation.which.co.uk/home-energy/mortgage-refused-ews1-form-cladding/#comment-1610527

That includes comment regarding partnering. The feedback we’ve had on allowing affected leaseholders to share their stories in their own words has been extremely positive. Given the circumstances, I’m proud of that. As Richard has said, we’ll continue to do that as it is providing support – media coverage helps create impact and bring about change through awareness.

If any of this changes then this site will be the first to know.

Geoff says:
24 November 2020

The NHBC building warranty system allows builders to walk away from responsibility after 10 years. Builders are incentivised to cut corners, calculating what is just good enough to get them past the 10 year warranty period, before it fails.
Just a bit less cement with the sand can save serious money over a few hundred houses. Who will know?
Our experience was a serious damp problem that was obvious within the 10 year period. The Builder did a bodged repair, that limped them just past the 10 year warranty, and then failed.
When we spent a lot of money to get to the bottom of it all, it was obvious to anyone that the initial build was in no way of an acceptable standard in terms of weatherproofing around window openings. The “reputable” and well known local housebuilder came and looked, and then refused to take any action whatever, because it was out of warranty. And they were not compelled to.
We couldn’t make a public fuss about the builder, because that would have made our property unsellable.
We had no redress.
The retail goods act requires goods to be of merchantable quality for a substantial proportion of their expected useful life.
But for buildings that should last 100 years or more, builders can walk away after 10 and leave the owner to clear up their mess with no hope of redress whatever.
How is this just?

Personally, I think that the LOcal Council should pay as they employ the building inspectors who are responsible for ensuring building are built to the regulations and the Council gets paid via the fees for planning applications, so if the building inspector has not done the job correctly surely the council is vicariously liable ? – just as a side note my friend, who is a builder built an extension to his own house and the building inspector wanted to see everything and was a real pain – knowing no one would deliberately build their own house badly,

It appears that councils have no financial liability for their negligence or mistakes in building inspections.

£100,000 seems an eye-watering amount to fix the cladding on a single apartment. How does that break down exactly?

And how can a leaseholder be made bankrupt because they either cannot or simply decide not to pay any charges levied? Do they have unlimited liability to the freeholder?

The nearest equivant cost that a house freeholder would face is to repair subsidence. With any luck that would be covered by their building insurance. If not, the freeholder has to pay it themselves, leave the property uninsurable, unsaleable or simply walk away and lose any money they have in the property. At no point does the prospect of bankruptcy arise. Does that never happen to a leasehold property? Is there no precedent?

I have no experience of owning an apartment. It seems to me this is more to do with differences in freehold property, leasehold tenancy, inequitable contracts and liabilities, inappropriate insurance cover and bad legal practices. Less to do with the specific technicalities of cladding, firebreaks and building regulations. Expensive problems with buildings happen all the time.

I don’t wish to appear unsympathetic by asking these questions. I simply want to know more about these issues, and what I would need to do to protect myself in the event of moving into an apartment in later years.

They won’t be able to decide not to pay it unfortunately – if they’re issued a Section 20 notice then they will be obligated to pay. Many leases will be set out in a way that makes costs for building maintenance recoverable via the service charge from leaseholders. However, no one could have imagined (and certainly not at the time of buying a property) that the regulations and/or building itself would later be declared defective. Building regulations do not usually apply retrospectively, which has caused the horrible situation that Jake, Sam, Steve, Abi and thousands of others across the country are living through.

You’re right, there are huge differences between the freehold/leasehold systems of ownership. In my opinion, this situation is a perfect storm of defective regulation, poorly built buildings and the leasehold system itself. It’s a truly horrible one to be living through.

There are different problems evident. One is where a building was built in full accordance with regulations in force at the time but is now found to be a risk. The other is where a building was defective at the time of building, such as the example above where the cladding is compliant but fire breaks were not compliant. That, surely, is not covered in leases by “building maintenance”; I would suggest that the original builder is responsible or, if they are defunct, the building freeholder.

However, the problem with publicising these issues here is that Which? cannot help. So debating them without expert input seems a little pointless. We are just repeating what has been said in other similar Convos with no outcomes nor useful input.

I agree, George. A particular problem with this situation is that it sterilises the transfer of property in a whole block and, in many cases, before any expenditure has been authorised or incurred. Ordinarily, if one leaseholder in a block failed to pay their service charges it would not compromise the ability of other leaseholders to move, remortgage, or staircase their shared equity position.

Before a freeholder can serve a Section 20 notice requiring payment for repairs and maintenance they have to have (a) notified the leaseholders of their intention to undertake such works and provide an estimate of costs and flat-by-flat liabilities according to whatever formula is provided in the lease, and (b) carried out the work. As I understand it many freeholders are refusing to even take these steps, and cannot [or will not] commission an external wall survey. The lending institutions have therefore refused to offer mortgages in the absence of an EWS1 report because such refusal [or abstinence] impairs the value of the property and increases the level of risk.

This has completely locked up [to put it politely] the buying and selling of leasehold apartments in residential buildings with multiple leaseholders and it also impacts on any tenants of leaseholders whose position has become less secure as a result of their landlord’s predicament.

The government just doesn’t seem to recognise there is a problem since its response has been late, weak and inadequate and, indeed, has not even given much comfort to those in buildings technically outside the scope of the regulations.

I have no direct personal interest in this problem but was pleased to see the recommendations of the House of Commons select committee on housing although, unfortunately, they have no binding impact on government policy.

There have been occasional references here to “fit for purpose” or “satisfactory quality” rights under the Consumer Rights Act 2015, and to questions of “merchantable quality” or being “as described”, but even if these provisions were held to be applicable to the transfer of property it is unlikely than many leaseholders could benefit from them. In the case of newly-built blocks the current leaseholder might have an action against the freeholder [as seller] but the freeholder might not have been the builder or developer and forcing them into liquidation could give rise to worse problems. For blocks that have been around for some time, and for old blocks that have had cladding applied more recently, there is likely to have been a chain of leaseholders each buying from the previous one; pursuing those previous owners would probably be fruitless and the freeholder and the builder or developer would remain untouchable.

I’ve explained the current position above: “The feedback we’ve had on allowing affected leaseholders to share their stories in their own words has been extremely positive. Given the circumstances, I’m proud of that. As Richard has said, we’ll continue to do that as it is providing support – media coverage helps create impact and bring about change through awareness.”

Leaseholders have been extremely grateful for the opportunity to publish their experiences here in their own words – I’ve had some lovely feedback. Coverage does create pressure, which does help. If Which? decides it can offer more, this site will be the first to know.

I have seen nothing about building insurance that the freeholder is required to take out. What should this cover? If it does not cover certain risks is the freeholder negligent in their choice of policy?

Good point, Malcolm.

I understand that the buildings insurance on multiple-dwelling properties is much more expensive than on a like-for-like owner-occupied house. A friend who lives nearby in a two-bed flat in a two-storey block of four with each flat being self-contained and with no communal parts has to pay over £400 a year just as their share of the freeholder’s buildings insurance. Even with [supposed] competitive tendering these policies seem extortionate and if they don’t cover reasonable risks it could amount to negligence. Because the freeholder transfers the cost to the leaseholder [who can then covers it with rental income if they let the flat] there is little incentive to bear down on the costs or improve the cover.

I used to be involved in managing blocks of flats , around 75 schemes ranging from four to several hundred flats. I think there may be rogue administrators but there is nothing to stop residents to seek competitive quotes and bringing them to the attention of freeholders and managing agents.

There would be a logic to flats being more expensive than a similar sized private house as you have four times the chances of kitchen fires etc and also water related claims. The propensity to claim is also significantly higher as for the individual any increased premium due to a claim is a shared cost.

There is a slight benefit in that the administration of these policies in relation to the premium is very much lower than say arranging cover and marketing to say a hundred people but this is slight and can be countered by more claims. I cannot comment on the payment of commissions to agents for placing the policy as it may have changed since the 1990’s.

I could go on to talk of the likelihood of claims where a scheme is fundamentally poorly constructed or poor on maintenance. One scheme in Bristol was notorious for water claims due to the way pipes were hidden in construction behind tiled walls. Given the 40 years from when it was constructed and when I was dealing with it the likelihood of expense was rising sharply.

An unfortunate example I mentioned when I gave evening classes to flatdwellers was that agents sometimes had delegated power from the insurers to approve minor repairs under acertain figure say £1000. I knew of one case where the the most trivial ceiling repair job was given to a ring of contractors who gave a kickback to the agent. An under £400 job done for £900.

Flatdwellers need to be proactive in keeping an eye out for inflated costs and agents relationships with contractors. The majority of agents are honest and having contractors familiar with the idiosyncracies of complex schemes is actually good policy. Price is not necessarily the final factor.

The Guardian has an interesting article currently on excessive management charges.

Patrick – I understand the points you make about insurance cover for the potentially higher risks and liabilities involved with a block compared to separate housing units, and I agree that additional costs would arise in the event of certain perils [e.g. subsidence or a lightning strike to the overall roof] but I can’t see that it should be at such a premium to a terrace of four two-bedroom cottages where the annual buildings insurance premium might be of the order of £150-200 each. The four flats in our friend’s block each have their own ground floor entrances and are of fireproof construction so a kitchen fire in a ground floor flat should not spread to the upstairs and adjacent flats. Given that the overall premium for the block of four flats is over £1,600 it could be that the policy requirements and cover are somewhat inflated.

If those figures are representative of the pre-EWS1 position for building insurance costs for multi-storey flats, adding insurance cover for the remediation of any cladding or other construction deficiencies in a residential block would make the cost of insurance per unit extremely expensive and possibly prohibitive, and I still don’t think it is fair for the burden to fall on the present leaseholders.

I have suggested that our friend joins with the neighbours and seeks to take over the management responsibilities or failing that to do as you suggest and seek their own insurance quotations and bring them to the attention of the freeholder or managing agents. Their first priority, however, is to escape from the implications of EWS1.

GM ” Leaseholders have been extremely grateful for the opportunity to publish their experiences here in their own words – I’ve had some lovely feedback. Coverage does create pressure, which does help. If Which? decides it can offer more, this site will be the first to know. “

Ah feedback. Great isn’t it. To think of the years I and others have written on these very pages that there are serious problems in how the building industry operates – and always to the disadvantage of purchasers.

Is it a decade since the Dutch introduced a law where 5% of the purchase price was retained on new properties to make sure snagging was done. Such a simple idea, so very simple. Would a a consumer champion run with it? And why not?

It is probaly over a decade that the Guardian has written on many building problems. Probably fifteen years since the Scots went to war with the Greenbelt group on unfair terms on buying properties. The Chairman was a longtime Trustee of the Consumers Association the charity which owns Which?. You would have thought that the charity would have been sensitised b having him named in the Scottish Press and the company mentioned in Parliament.

Apparently not so because the growth of expensive conditions and Ground Rents in England grew after this time. Perhaps the builders encouraged by how much they could get away with given a self-declared consumer champion that apparently has not the ***** to criticise heavily and consistently the shortcomings or offer new laws for consideration. I hoped that attiude would change with the defenestration of the last CEO.

This charity needs to pull its finger out in looking at the big failings where people are out life-changing amounts of money. Members really need to press the Trustees that Which? should be far more activist in looking at current and looming failings, and organising effectively on immediate matters where working as an echo chamber does not really advance matters.

I was a bit shocked to read about this in the latest which magazine. Which? could raise awareness more by creating a campaign to petition the government.

The Government has, I am afraid, to manage this situation in the absence of others. The responsibility is with the builders and developers who are the Suppliers and not tenants or leaseholders who are the Buyers. The product they delivered is not fit for purpose. Neither should the taxpayers or Government be saddled with the bill. The Suppliers must face the fire. Either they carry out all remedial work to make the buildings safe or the Government confiscates the building, carries out the work and resells. I agree with the principle that buying property should at least be equivalent to buying other types of goods. Builders seem to live in another world when it comes to the definition of a finished product.
A similar argument relates to building houses on flood plains without appropriate mitigation measures in their design or delivery and leaving the taxpayer to pick up the bill when it floods.

I have worked in construction for 57 years. We have known for 25 years that this type of insulation burns. When it has a void behind it it acts like a chimney. The people that specify these materials should be held responsible and their insurance should pay. They are paid big sums of money to design these buildings The buildings are not fit for purpose. Its the same old storey the people at the top are not in touch with reality. The next thing will be timber cladding.

Norman – Perhaps “the people at the top” should be consigned to living at the top of their buildings, although I wouldn’t wish the potential consequences of their bad decisions on anyone.