Another ground rent speculator, the Pemberstone Group, is seeking a tribunal ruling to dump Grenfell cladding costs on 300 leaseholders at two Manchester sites, reports The Independent today.
The two sites are Cypress Place and Vallea Court in the so-called “Green Quarter” of the city.
The sites were built by Australian builder Lendlease but the freeholds are owned by the Pemberstone Group.
Even though the government has repeatedly urged housebuilders and freeholders not to dump these construction defect costs on to clients who in good faith bought these products, Pemberstone is the latest freeholder to run off to the courts.
The costs involved are reported at £3 million, but there is also a waking watch fire marshal service involved.
So far, every case that has gone to the tribunal has ruled that the leaseholders have to pay: Citiscape in Croydon and the Fresh Building in Salford.
At Citiscape, Barratt stepped in to pay the cladding replacement even though it built the site in 2001. Taylor Wimpey agreed to do the same at Glasgow Harbour, where the homeowners are not leasehold tenants under Scottish law and would have had direct access to justice as a contracted party.
In spite of repeated pleas by government, freeholders have not volunteered to pay for the cladding removal at their sites, with the exception of Legal and General at Blenheim Centre / Reflexion flats in Hounslow, west London. But in that case, Legal and General also owned the shopping centre below the flats, so may have had considerable exposure to the bill in any case.
LKP has never quite understood why the government, whose regulators may have approved the flawed cladding in the first place, expect speculators in residential freeholds to pay up.
It is a fiction that freeholders have an interest in the long term condition of a block of flats: their income is unaffected whatever its condition – although commissions are paid if they can dream up a never ending succession of “improvements”.
‘Real immediate danger’: Residents of two Manchester tower blocks may have to pay to replace deadly Grenfell-style cladding
Residents of two apartment blocks in Manchester could have their rent increased to pay for the bill to replace Grenfell Tower-style cladding. More than 300 people living in the two blocks in the city’s Green Quarter are “potentially in danger of losing their lives” while the cladding remains on the building, one resident warned.
Pemberstone would have bought the freeholds to these sites for the ground rents, consent fee incomes (including the raft of fees payable when leasehold properties are sold), insurance commissions and management contract.
Pemberstone claims, reasonably enough, that it had no involvement in the decision of which cladding to use at Cypress Place and Vallea Court.
A spokesman for Pemberstone told the Independent:
“We are in dialogue with Lendlease and our technical team has provided information for them to review.
“Pemberstone was not involved in the design or development, nor in the sale of the apartments.
“Pemberstone owns the landlord’s ‘revisionary’ interest, which was transferred to it after the properties had been fully constructed and all apartments sold.
“Pemberstone’s landlord’s interest represents only a very small proportion of the overall value of the development and its apartments.
“Considerable resources have been devoted over the past 10 months to working with and managing the professional team appointed to identify and finalise an appropriate final solution which can then be implemented.”
Lendlease declined to comment to the Independent.
The key here is to look at how quickly Glasgow Harbour resolved this matter, with the evasiveness of the England-based developers (with the noble exception of Barratt).