Demonstrations by flat owners, articles in the Financial Times and mediation with the company via LKP have improved the lot of disempowered leaseholders at prime London sites …
By Harry Scoffin
Seven months after leaseholders at Ballymore’s prime London sites raised their dissatisfactions in the Financial Times there are no regrets – in spite of the risk of talking down their own properties’ values.
The article, by investigative writer Madison Marriage – who exposed sexually charged Presidents Club fundraisers, at which property punters were to the fore – was an astonishingly strong rebuke from leaseholders against their developer-cum-freeholder-cum-managing-agent.
In common with other family-owned Irish developers in London – such as Galliard and the Comer Group – Ballymore holds on to its freeholds and has its own company to manage them.
Leaseholders were not happy, with complaints of soaring service charges and mismanagement.
Two of the most eye-watering case studies reported by the FT included a lessee at New Providence Wharf, a development on the Thames in east London, whose service charge had surged 77% to £9,000 over the past four years. A neighbour told of service charges that had grown 58% to approximately £3,800 in the same period.
The Embassy Gardens development in London’s Battersea offers buyers “a life like no other”. Its website features lithe young women relaxing at various on-site facilities, including a Jacuzzi, sauna and sky-high swimming pool. But it comes with unanticipated costs.
LKP has long deprecated the general timidity of leaseholders in flats – where there will always be some owners desperate to sell – publicly to call out dubious practices.
Given the pro-landlord culture of the property tribunal – and the unfairness of the unequal legal cost regime – it is unsurprising so many valid leasehold disputes fail to be raised.
Parliament told the Property Tribunal ‘stinks’: it lets down leaseholders again and again – Leasehold Knowledge Partnership
In the last debate before the summer recess, MPs considered the role of the Property Tribunal. MP Jim Fitzpatrick set out an extensive list of failings which he put at the door of the Tribunal saying that a number of his constituents found the system “stinks” “The first-tier tribunal is supposed to offer a simple, …
But the Ballymore leaseholders were undaunted by publicly speaking of their perceived injustices, and are delighted to have done so.
ext week London marks a grim anniversary. Four years ago on June 14, a fire broke out at Grenfell Tower which killed 72 and left many more injured, traumatised and homeless. But for thousands more, like Natalie Carter, the day is more than a time for reflection and remembrance.
“There is no doubt that the Madison [Marriage, FT] piece brought Ballymore to the table for the first time to discuss service charge issues,” said Karryn Beaumont, a former chartered accountant whose work into spiralling service charges and opaque insurance arrangements at New Providence Wharf featured heavily in the newspaper’s unflattering portrait of Ballymore’s leasehold practices.
After weeks of grey and soggy gloom, the British public were finally able to put their winter coats away with confidence when the late May bank holiday weekend arrived. Bank Holiday Monday was recorded by the Met Office as the hottest day of the year so far, and the heat continued into Tuesday â?”
Ballymore was then the subject of a public protest in London Docklands following a fire at New Providence Wharf on May 7.
More than 150 demonstrators waved banners, such as “Ballymore, given the chance, will bleed you dry”, “Leasehold is slavery without the whip” and “Mafia managing agents – leasehold misery: Regulate now!”. A succession of cars, filled with other Docklands flat owners, hooted their support for the protestors.
“After organised protests, campaigning and further media coverage following the fire in May, Ballymore confirmed it would pay for the cladding at New Providence Wharf not covered by the Building Safety Fund,” added Ms Beaumont.
Residents living in flats with ACM cladding gathered in Isle of Dogs, east London, on Saturday to urge the government to protect leaseholders from post- Grenfell remediation bills. Protesters held placards while chanting “enough is enough”. Police were also seen at the protest.
High Point Village in Hayes, west London also figured in the FT article and, in June, Ballymore and the leaseholders approached Leasehold Knowledge Partnership to hold a mediation about cladding bills, service charges and suspected build defects responsible for overheating apartments.
Tony James, a leaseholder who attended, said:
“From our perspective, nearly a decade of dysfunctional and abrasive relations was set aside as a result of an LKP-mediated meeting and a reset with improved communications and a more consultative approach is starting to commence.
“Ballymore are taking proactive approaches to managing the building safety crisis at their developments. We have been told of plans to bring their three arms into a closer working relationship: an overhaul of their finance team and service charge system and the appointment of dedicated staff to co-ordinate remediation work and liaison at their developments.”
At New Providence Wharf, leaseholders were expected to finance a £3.1 million shortfall for the cladding remediation project.
Ballymore, whose after tax profit for 2019-20 was £97 million, had informed residents of a £500,000 contribution.
For Ballymore to change its position towards remediation costs at the site, it took a fire “minutes away from being another Grenfell Tower”.
“The building’s on fire! Get out!” Nadim Ahmad’s wife, Aneela, screamed down the phone. Three minutes earlier she had left their flat on the 14th floor of an upmarket Thameside block, near Canary Wharf in east London, to take their three daughters to school.
Within 24 hours residents had organised a demonstration outside Mill Harbour, a joint venture between Ballymore and Sun Hung Kai Properties, a leading Hong Kong developer.
The fire and demonstration were widely reported in the UK and Far Eastern media, exposing Ballymore to adverse coverage with its important Chinese investor market.
Homeowners and the developer of a London housing complex are locking horns over property management costs linked to fire safety repairs, and the dispute has spilled over to another project whose codevelopers are tycoons in Hong Kong, the Kwok family.
Days before a second protest took place outside Ballymore’s Wardian complex in Docklands, the company reversed direction.
It told New Providence Wharf leaseholders on June 1 that “no costs for these works [addressing fire safety] will be recoverable via the service charge or charged to leaseholders”. The nearby Pan Peninsula, where Ballymore’s owners, the Mulryan family, are also understood to have a home, received similar written confirmation from group managing director John Mulryan.
This meant that Ballymore increased its commitment from £15 million to £20 million to address fire safety issues at all its sites.
Elsewhere, Ballymore’s leaseholders were also mobilising.
At High Point Village in Hayes, west London, leaseholders had already involved media, including a BBC1 Panorama programme, to draw attention to overheating design flaws. They, too, cooperated with the FT investigation into Ballymore service charge practices.
Justin Rowlatt visits communities around Britain battered by this year’s extreme weather.
High Point Village segment of Panorama documentary begins from around 34:00
But there was no cast-iron guarantees from Ballymore on fire safety remediation costs at the site, prompting concern that the money would be insufficient.
Housebuilders should use their huge profits to fund the cost of cladding repair works, politicians and campaigners have urged. The cladding crisis has had a devastating effect on Britain’s property market, with millions of homeowners unable to sell their homes because of Grenfell-style materials on their properties.
High Point Village leaseholders knew of at least six Ballymore estates and 17 buildings that required cladding remediation. Adding £5 million to the £15 million already pledged for fire safety made them fear that they would be left out while the prime Docklands sites were sorted.
Homebuilder Ballymore has agreed to pay £20m towards fixing fire safety issues across its housing developments in London in a move it said could remove all cladding-related costs for thousands of its leaseholders.
Local MP and former shadow chancellor John McDonnell said he wanted to “make it clear to the Ballymore company that I will not tolerate any threat to my constituents and their right to expose and protest against the way in which it has treated them” and called for “legally enforceable commitments from the company” on safety defects rectification funding.
Ballymore, the Irish building company owned by Sean Mulryan, has sought a meeting with a British Labour Party MP who has repeatedly criticised it in the House of Commons. John McDonnell, an MP for the London constituency of Hayes and Harlington, and Labour’s former Shadow Chancellor of the Exchequer, has used parliamentary privilege to call Ballymore “notorious profiteers” and to accuse it of using “emotional blackmail” against its residents.
Both the leaseholders and Ballymore then approached LKP to act as mediator, presiding over an on-site meeting, which prompted the High Point Village leaseholders to cancel another demonstration on 26 June.
The dialogue secured agreement that remediation costs would not be dumped on the leaseholders, and that leaseholders would have the residents’ association formally recognised as an RTA [Recognised Tenants’ Association, which in fact represents the leaseholders].
This move by Ballymore contrasts favourably to the approach taken by others.
At New Festival Quarter in Poplar, east London, Bellway resisted at every turn efforts by leaseholders to overcome collective action problems with an RTA.
Down the road at West India Quay, leaseholders engaged LKP to successfully fight off a David and Goliath legal battle waged by their freeholder:
Recent media campaigning has also helped spare Ballymore leaseholders from other fire safety costs, with Ballymore honouring waking watch fees, which at New Providence Wharf began at £47,000 a month before reportedly surging to £94,000 a month after the May 7th fire.
LKP has learned that Ballymore will be meeting the cost of fire alarms across all its developments. The withdrawal by Ballymore from the Waking Watch Relief Fund has freed up 6% of the overall money that would have otherwise been claimed for these safety upgrades. The WWRF re-opened in September with an additional £5m cash injection.
LKP encourages other developers to adopt this positive approach to handling leaseholder cladding and build safety concerns.
Cladding crisis: ten builders have made more money since Grenfell than their companies pledged for safety works
Ten top executives and shareholders at Britain’s biggest housebuilders have personally pocketed more money since Grenfell than their firms have set aside to fix the cladding crisis. The bosses and owners have made a total of £708 million in dividends, share sales and pay over three years, £65 million more than their companies have allocated to fix dangerous homes they have built.
Although the New Providence Wharf fire secured global media attention and was picked up widely in Hong Kong where cash-rich investors are eager to acquire a chunk of London property, its leaseholders are not the only ones to have campaigned for Ballymore to take financial responsibility for fire safety remediation after a blaze.
On 3 June 2018, 58 firefighters descended upon West Hampstead Square, a Ballymore scheme in Camden, north London to tackle flames across balconies made of recycled tires.
In a development the London Fire Brigade described as “unprecedented in a residential fire”, five apartments were “exposed to fire and heat” within 19 minutes of the first sprinkler’s activation.
The LFB concluded that had there not been an automatic fire suppression system in place, “the outcome could have been … fatal”.
Despite acknowledging Ballymore is ‘doing the right thing’ by paying for the works, West Hampstead Square leaseholders have told LKP of their anger at the three-and-a-half-year wait for remediation to commence:
“It took Ballymore long enough to get there. Like leaseholders from the other sites, we had to protest outside Ballymore’s new developments and we spoke to a lot of reporters as well. The fire was in July 2018 then the review process came out at the end of that year from the LFB. In September 2019, Ballymore was served a formal Camden Council improvement notice.”
Special Report Published: 1:49 PM March 22, 2021 Leaseholders whose flats failed fire safety inspections fear they will be “trapped” in the properties for another three years. Developer Ballymore has written to residents of West Hampstead Square, saying works to replace flammable balconies and insulation are expected to take until 2024.
The leaseholders said there was “no question” their speaking up, the FT investigation and backlash to the New Providence Wharf fire benefited West Hampstead Square, nudging Ballymore into action. Workmen eventually began works “five days before their final notice came in from Camden Council”.
Ballymore provided the following statement to LKP for this article:
“We remain committed to building homes and communities in which our residents thrive.
“We continue to engage openly and constructively with all of our residents and leaseholders across our developments. As a result, we have taken steps to further enhance our services and deliver best value from service charges.
“The purpose of our property management business is to enhance the lives of our Ballymore residents which is why all of our profits go back into the maintenance and upkeep of our properties.
“We welcome the positive engagement of the Leasehold Knowledge Partnership in our discussions with residents at High Point Village where we continue to support residents’ and leaseholders’ aspirations to establish a Recognised Tenants’ Association.”
Ballymore’s West Hampstead Square fire safety project is set for completion in 2024, a whole six years since the Orwell Building fire and three years on from leaseholders receiving the B2 rating that flagged the issues.
Beyond cladding, leaseholders across the schemes are anxious to see Ballymore’s new commitment to service excellence extend to service charges and management. As a West Hampstead Square resident, who is too scared to be named, explains:
“In the five years I have been here, my service charges have doubled. We’re still waiting for the 2019/20 accounts … £60,000 in legal and professional fees, 10x what it was last year. Our gardening fees have doubled, which Ballymore say is because loads of plants have died, but they died because of their lack of maintenance in the first place.”
The unnamed leaseholder also claims the multi-block development has been blighted by leaks – which they suggest Ballymore only conceded were linked to build defects and something they would sort the bill for after persistent demands from the residents’ association and floods that even involved electrical wiring.
He added: “Like with the fire safety issues … they completely ignored us for years and tried to hush it up and do easy fixes. If they had addressed it when it was raised, it would have prevented much more damage, stress and cost.”
When the Harding Building was being fixed from June to November 2018, countless residents had to leave their homes, and the roofing works that started this September will require penthouse occupiers to decant the site for a number of months.
At New Providence Wharf, service charge affordability is still a concern, with service charges for the 2021-22 financial year roughly unchanged from the previous year as some buildings experience a 2% fall whilst others a 4% rise. Efforts to reduce the service charge this year were eroded in part by increases in insurance costs.
The surveyor that has been appointed by the leaseholders continues to investigate ways to bear down on service charges.
Even more progress is being made at nearby Pan Peninsula, where in April leaseholder Andy Yardley proposed to Ballymore a plan to reduce service charges by 20% and peg the yearly budget based on the £/sqft sales over the previous years. He said:
“I don’t think we are going to hit 20% this year, but we will get close. The new general manager Dan Sanders is certainly making a difference. However, there are still transparency issues and any changes need to be sustainable.”
Speaking of squeezed leaseholders who don’t have Ballymore as their landlord, Mr Yardley cautioned against suffering in silence, claiming “they should consider sharing their stories with journalists. It’s the only way capital values and rental yields will recover”.
Observing that estate agents often dodge units with sky-high service charges, Mr Yardley continued:
“Being quiet, hoping for the best and then plotting a clean getaway so you can move on with your life and dump the problems onto some poor innocent when you sell up won’t work anymore … buyers are getting savvy to what leasehold means. People don’t want to be handing their chequebooks over to developers, freeholders and managing agents in a system lacking checks and balances.”
Evidencing the pitfalls of not speaking up, resentments are building at Embassy Gardens in Battersea’s Nine Elms, the flagship Ballymore scheme with a 25-metre-long floating ‘sky pool’.
The number of swimmers at any one time in the Sky Pool is, disconcertingly, limited to 19. For critics it is aquatic bling that highlights the chasm between London’s property haves and have-nots. For fans it is a technical and aesthetic tour de force that only the capital could pull off.
Despite being a relatively new development with phase two properties coming on stream in 2018-19 and the final phase on track for completion beginning next year, early purchasers still found themselves in EWS1 limbo. Speaking to LKP on condition of anonymity, they said:
“Cladding was a nightmare to start with. Anyone in the process of remortgaging or selling were caught up because they were unable to provide the EWS1 forms for a long time – most frustrating was their lack of concern. Residents had to constantly chase their cladding team via some faceless email to get any idea of what was happening.”
They credit the campaigning work of leaseholders on other developments for the reorganisation at Ballymore, where “a few heads have rolled”.
Affordable housing residents complain about poor services at south west London block
Another leaseholder explained Ballymore relies on apathetic buy-to-let investors to resist owner-occupier calls for reasonable service charges at Embassy Gardens, which lacks a formal residents’ association and has not been applying pressure through the media or other channels:
“Service charges remains the biggest issue. Leaseholders should have control over how much their properties cost them. Unfortunately, the modus operandi of said company is to flog these apartments overseas so what ends up is leaseholders, mostly overseas buyers who have even never set foot in the UK, being left ignorant of the flagrant and unjustifiably exorbitant service charges.
“The service companies are just one big web of intermediaries connected to the Mulryans and it’s clear it all stays within the family. Why that’s a problem, is that there is a significant conflict of interest – leaseholders don’t get the best out of these relationships and are short-changed by poor service at silly costs … You send an email, you complain, you never hear back, repeat the process until they wear you down by not responding to you or providing a standard fob-off reply.”
They talked of Ballymore “spunking money away” with a service charge budget of multimillion pounds and complained that PR and marketing related initiatives were kept over essential items in a recent efficiency drive:
“Ballymore put too many people into positions most with zero experience of hospitality and who have no idea of residential management.
“Here at Embassy Gardens there are over 8 full-time on the payroll personal trainers – why? When they mostly sit there taking selfies at the skypool or around the resort for socials. When the pressure started coming on about service charges, the first thing they started cutting was security, concierge and parcel services – all the essential things are being cut but, the things that can be avoided, the operational fat as we call it, is not being touched.”
Those leaseholders who spoke to LKP said they believe Embassy Gardens should look to New Providence Wharf and High Point Village for inspiration in executing a media and lobbying strategy.
But some have lost the will to stay and fight, with one Embassy Gardens leaseholder saying they have moved out and will sell up once the EWS1 is signed off because “I feel that owning the apartment has aged me more than my day job … Since moving to my freehold house, the difference is night and day. Ballymore isn’t worth the headache.”
Maybe having the company throw its support behind a recognised residents’ association at Embassy Gardens, like it has with its noisier High Point Village development, could see off a growing leaseholder rebellion?
LKP’s offer to publish an opinion or rebuttal piece from a senior Ballymore executive still stands.