In yet another retreat by plc house builders, the Aussie giant Lendlease is stumping up to pay to remove the Grenfell cladding at Vallea Court and Cypress Place, in Manchester’s Green Quarter.
Before government ministers start talking rubbish about “freeholders doing the decent thing” – or worse, describing these speculators in residential freehold income streams as “responsible long-term custodians” – let’s just clear a few things up.
The bill is £5 million, which is rather beyond the scope of freehold owner Pemberstone, which was reporting £75,000 in the accounts in 2017.
It is a huge bill and Lendlease is paying it.
Lendlease has agreed to pay for the replacement of flammable cladding on two tower blocks in Manchester’s Green Quarter. Residents had been campaigning for two years to make the buildings safe after unsafe cladding was found following Grenfell tragedy safety check. The contractor agreed to fund the project along with freeholder Pemberstone.
Leaseholders in two high-rise blocks have spoken of their relief that they will not have to pay £10,000 each to replace dangerous cladding. Freeholder Pemberstone has announced a fund has been set up to pay for the work at Cypress Place and Vallea Court in Manchester. Leaseholder Beverley Reynolds-Logue said: “I’m absolutely delighted.
Doubtless the housebuilding and freeholder lobbyists are hard at work validating the leasehold system and its professional freehold investors.
But the truth of the matter is that Lendlease has capitulated over the inevitable reputational fallout.
Pemberstone had already won last year a court ruling that leaseholders rather than itself would be responsible to pay up for cladding removal.
Having Lendlease pay instead is an excellent result, and many congratulations to the leaseholders who made this issue as public and embarrassing as they could for property interests which would have been more than happy to land them in it.
Sadly, not all the private cladding sites have large plc house builders to call on.
Northpoint in Bromley is problematic because it was built in 1999 by Alfred McAlpine Homes. It was acquired by Taylor Wimpey, but that entity is still holding out. We hope that it will cave in, in time.
Heysmoor Heights in Liverpool is even worse: the builder went bust long ago. The freehold is owned by anonymous private equity interests in Abacus Land 4 Limited, based in Guernsey, which is part of the £1.4 billion portfolio of residential freeholds in the Long Harbour fund.
The ultimate ownership is carefully hidden behind nominee directors of the Sanne Group – and they are very likely to remain hidden under the circumstances.
The freeholders issued a loan to the site to pay for fire marshals – it risked prosecution if it had not done so, although it could have evacuated the building altogether. But they also successfully obtained a ruling that leaseholders pay to remove the Grenfell cladding.
It is a grim situation, and there are other private sites in the same position.
But the lesson from Vallea Court and Cypress Place, where a plc house builder put this cladding on the sites, is: shout from the rooftops and get as much media and political attention as possible.
Government is truly fed up with plc house builders breaking the rules – spreading toxic leases all over the country; making a mockery of the Help To Buy scheme; paying outrageous salaries to unremarkable executives (yes, that’s you, Jeff Fairburn).
And the big house builders need government on side.
Only a couple of the Irish house builders have aggressively pushed back over Grenfell, but wisely they, too, have become more emollient, doubtless aware that a few disobliging questions about their tax status would be even more unwelcome than stumping up a few million for cladding removal.