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).
It is of interest to note that thus far, no court has made a legal ruling as to who is responsible for the cladding disaster?
It is true that the FTT ruled leaseholders had to pay according to the terms of the lease(see Citiscape judgement), but that was not a legal ruling on blame.
So who could have been to blame? Logically it could only have been developers/regulators.
An odd quirk of leasehold is that if by chance someone were to buy a leasehold, and the former leaseholder left with unpaid debts, the new leaseholder would become legally liable for those debts. They would have bought a “defective lease”. It would then be open for the leaseholder to recover the debts from the former leaseholder or their own solicitor.
So if leaseholders can be held responsible for something that they were unaware of, and not to blame for, why not a freeholder?
Before purchasing the freehold, they should have done due diligence.
They could have found out the dangers of the cladding. And those dangers were well known. There had been a fatal fire in Irvinge in 1999.
Pemberstone has purchased an asset to return a profit. They must take responsibility for the ownership of that asset.
Speculative investing cannot only be a one way bet!
That the NHBC has taken responsibility for cladding claims totally undermines Pemberstone’s position. They should pay up, get the work done, stop endangering the lives of their residents and then claim against the NHBC. .
It seems the freeholders and leaseholders have been caught up in not fit for purpose regulations. As the feudal laws seem to protect the freeholder from responsibility we see the leaseholders as incumbents and another flaw in leasehold tenure laws. True, the freeholders did not design the buildings or implement the planning regulations and can argue that. But they own the buildings and have a duty to make the buildings safe for the leaseholders. After all, they are only leasing part of the building for a fixed period, they do not own it. They did not design or install the cladding either, so why should they bear responsibility for the cost of removing it?
Clearly there is a huge question over building regulations with regard to the use of combustible cladding and insulation. For decades under successive governments the building regulations have been trimmed down to cut red tape, assist developers and councils in cutting costs and conflicted interests where cladding manufacturers sit on government advisory boards. This had led to the culmination of these tragic events.
In 2016, narrowly after the Grenfell refurbishment finished, the NHBC listed several common combinations of cladding and insulation which it believed could be signed off without the need for even a desktop study. This included Celotex RS5000 insulation and ‘Class 0’ aluminium composite material cladding: the exact combination used on Grenfell. It has now been removed from their website.
The cladding fitted on Grenfell and many other high rise tower blocks, schools and hospitals in England meet building regulations to Class 0 fire performance rating, the HIGHEST rating a material can get in the Building Regulations. But as we have seen, it is akin to covering the building in petrol, hence the governments immediate advice to remove the materials from those buildings. That is somewhat a contradiction don’t you think?
How do more civilised societies than England legislate to protect leaseholders and tenants against potential fire risks from cladding? This type of cladding/insulation risk was already known and legislated against in Scotland.
Since 2005 Scottish building regulations have stated that cladding and insulation on high rise domestic buildings should either be made of non-combustible materials or the whole cladding system subject to a full scale fire test. These regulations applied not only to new high rise domestic buildings but also if an existing high rise domestic building was being re-clad. Prior to 2005 cladding on high rise domestic buildings built or altered had to meet the same Class 0 classification as in England.
This appears to have been decisive. After Grenfell, 300 social housing towers in England were found to have potentially dangerous cladding. In Scotland there were None.
This issue is no new revelation. In July 2009 a fire started on the 9th floor of Lakanal House, a 14-storey block on the Sceaux Gardens estate in Camberwell, and quickly spread up 5 more floors of the building, killing 6 people. 3 women and 3 children in fact. The coroner’s report, which was sent to the Department of Communities and Local Government in March 2013, made a series of recommendations to the government. The Department of Communities and Local Government published a summary report of study into the ‘usability’ of Building Regulations, including Approved Documents B (fire safety). Since then, Document B still hasn’t been updated, and nothing has been published looking into the technical content of the fire safety regulations. When asked about the review of Document B in the wake of the Grenfell Tower fire the government said work is ‘ongoing’.
This country is a back water of feudal and unsafe legislation. It stinks.
Amendment. “where cladding manufacturers sit on government Fire Safety advisory boards.”