LKP has been copied into the following correspondence to Michael Gove, the Communities Secretary:
Michael Gove MP,
Secretary of State for Levelling Up, Housing and Communities
House of Commons
London
SW1A 0AA 12th December 2022
Dear Michael Gove,
(ALSO SENT BY ROYAL MAIL)
Leaseholder Deed of Certificate:
I write to you in respect of my being a UK Landlord with five Buy to Let (BTL) properties; all on BTL interest only mortgages. Two are freehold semi-detached houses and three are leasehold apartments; two of which are over 18 metres in height and where cladding does not meet current fire regulations in the wake of the Grenfell Scandal, and cladding and associated works are yet to be remediated.
Under the terms of the “Deed of Certificate” as I own more than three residential properties I am deemed liable to pay a proportion of cladding and associated works costs, as laid out in my leasehold contracts. I am NOT covered by any Building Fund financial package, where one would expect to be seen as a victim of historic failings in respect of Building and Fire legislation, but instead I am effectively classified as a “rich landlord” even though I have not been means tested to this effect and nothing could be further from the truth.
Let me give you some facts about my own case:-
Over the last eleven years my real profits from all five BTL properties, after expenses, including insurance, management fees, new boilers, new roof in one case, new windows etc…. etc…. and after HMRC self assessment all worked out and completed every year, amounts to an average profit of £276.45 per calendar month, or £63.79 per week – that’s over the last eleven years! That represents my earnings in total on all five properties inclusive. On top of that, my BTL mortgage payments have doubled since December last year and I am now in the red every month and making up the shortfalls from savings.
How can it be fair that I am liable for cladding and related costs under the terms of the ‘deed of certificate’ just because I have five BTL mortgaged properties? There is an obvious and somewhat naive assumption that all landlords owning more than three properties are rich and therefore should be liable for cladding costs. Where is the reasoning and/or data to support such a cut-off point of three properties or fewer being covered for remedial works and ‘owning’ over three properties being penalised, when we are ALL victims of the same negligence/fraud/corruption as exposed in the wake of the Grenfell Scandal?!
You have created a wholly unfair situation where someone with say three £1 million apartments in London is covered and deemed a ‘victim’ of historic failings, and someone like myself with properties in the midlands/north of England made up of two semi-detached houses valued at around £45k each, and three apartments; two currently values at zero, due to the cladding issues and one other valued at £80k, sees himself on the cusp of bankruptcy through no fault of his own; being on the wrong side of the ‘cut-off point’ in an arbitrary numbers game that sees equally justified victims of the Grenfell Cladding Scandal treated completely differently: some to be saved and others to be tossed off a cliff!
I cannot survive on £63.79 per week as an income from renting out property. as I am sure you can appreciate?! But as far as I am concerned that is my issue to deal with and soak up any shortfalls as mortgage rates go up and down and there is always works needing done that have to be paid for. Whether I sink, swim or just tread water is something I accept. My investments have not worked out and I have to deal with the consequences. But what I absolutely DO NOT accept is being made liable for cladding works where an arbitrary cut off point has been made that bears no relation whatsoever to income reality. There is a huge difference between a multi-million pound landlord business with offshore accounts and the reality of the situation I find myself in. In any case, why should I be penalised for the historic fraud/negligence/corruption of your government/previous governments and their agencies together with same failings in the building industry?! I have just as much right as someone with one, two or three residential properties – we are all the same victims yet treated wholly differently.
You have effectively decided that I am partly responsible for the Grenfell Scandal and cladding issues throughout England and Wales by association! By making me personally liable for a proportion of cladding and associated costs, whereby I have to pay a percentage of those costs, as laid out in my leasehold contract, you have decided I should pay, knowing that I am a victim of historic failings by government, its agencies and the wider building industry; as much a victim as those with three or fewer residential properties, yet deciding, with no logic, reasoning or arguable data, that I shall be deemed liable and will have to suffer the financial consequences as a result. And you only have to look at my figures for the last eleven years. How can I be expected to pay out 10’s of thousands of pounds, or more? And I know that there are many small scale landlords just like myself throughout England and Wales, who will be faced with huge bills through no fault of their own, victims of an arbitrary cut-off point that could see them financially ruined.
“Blameless” was a word you used to describe leaseholders caught up in the cladding scandal yet now I feel like I am being cast as one of the villains by effectively sharing the blame for the whole cladding scandal, as potentially I too am on the cusp of being bankrupted by the cut off point as stipulated in the “Deed of Certificate.”
Did you not state that Buy-to-let landlords with a portfolio of four properties or more won’t qualify for funds for cladding remediation work, with the reason being that, “…….those with greater income can afford to contribute more to repairs.”
How does my £63.79 per week BTL income qualify as being under the umbrella of…”those with greater income can afford to contribute more to repairs.”?
It seems that through no fault of our own, we are to become further victims of the Grenfell Scandal.
Of the two apartment s I own, requiring cladding remedial works, in one apartment the proportion of cladding costs I will be liable to pay is likely to exceed the value of that property. Is that not a wholly ridiculous and scandalous situation?! Obviously I would not pay and that being the case I would have to default/take the consequences of not being able to pay. I am sure you would agree it would be madness to pay for cladding works to a greater value than the property itself?!
In conjunction with the above, the monthly BTL interest on that particular property now exceeds the rental, so I am, in effect, subsidising the tenant every month. So, even if I could currently contribute to cladding costs, that will soon not be the case when my savings will have been decimated to cover shortfalls. And the situation is the same in four out of my five BTL properties, where the monthly interest has doubled in one year, with one other property, as noted, also subject to cladding replacement and associated works, not due for completion until late 2025 or into 2026.
I consider myself a very good landlord and have had the same DSS tenants in one house for the last eleven years. In the other house it has been the same tenant also for the last eleven years. I am now considering the sale of both houses, being freehold, to help stem the haemorrhaging of money and to subsidise the other three leasehold properties, two of which I am unable to sell in any case. That’s without even considering the cladding costs you have deemed I should pay. Those tenants, of course, will be evicted – another consequence/knock-on effect of punishing small scale landlords for the large scale historic scandal created by government, its agencies and big business.
I welcome your reasoned arguments and justifications for having created an arbitrary ‘cut-off’ point that will see many small scale landlords thrown off a financial cliff, through no fault of their own; just casual victims of flawed and unjust policymaking.
I am supremely angry to be continuing on this path of uncertainty over five years after the Grenfell Scandal. Should I really be surprised though given the twenty years and counting, for the Post Office Horizon Scandal to be running?!
(Name withheld)
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Good god. Pull yourself up by the bootstraps, cancel sky and work harder.
What is the point of your comment on this forum, if the only comment you can come up with is to poke fun at the problem.
I do think that those who engage in a commercial endeavour should bear risk, however there should be a more sophisticated means testing resulting in a contribution that is meaningful but not pushing the borrower into bankruptcy.
There is a failure on the Government’s part in allowing buildings to be signed off with these building materials in place
Not a wholly government failure.
Govt and NHBC were talking in 2014 fully aware combustible cladding was being used in buildings over 18m and some developers / architects and councils were under presumption it was legal. In effect, assumptions being made interepreting combustability, probably aided by the manufacturers. Likely to be the finding of the enquiry.
Remember, Phil Hammond, Chancellor, confirming all such materials were illegal over 18m height, right after the tradegy.
This is the advice i’m given. Sound advice right?
The current government continues to sidestep implementing leasehood reform and is out of touch with the plights of leaseholders at all levels from starter homes to retirement apartments..
Lisa Nandy, Labour’s shadow secretary of state for leveling up has promised reforms but we are going to need a general election first.
Bit torn on this one. makes valid points about cladding work costing more than the property.
But with five properties he is a business and it seems a highly leveraged failing one even without the cladding costs.
Why should someone with three properties not have to pay for cladding costs yet someone with four properties does? Is the person with three properties not a business yet the one with four is classified as a business. Why this cutoff point? And is it not the case that both examples are equally blameless as far as cladding is concerned or is the person with four properties to be considered part of the original problem and therefore should pay for cladding repairs. I can’t see it making any sense. As stated an arbritrary cut off point that cannot be reasoned.
I think that the example where the business is obviously not successful if judged on profits or returns, bears no relevance to the cladding issue. He has stated that the investment strengths or failings are down to hiim to deal with but seriously questions being made responsible for cladding costs. There appears no logic in the government decision.