UPDATE: FirstPort response, 6pm; Guardian report, 6.22pm; MailOnline report 23.40
Tchenguiz / FirstPort goes to court on February 6 to dump the £2 million costs of removing Grenfell Tower cladding at Citiscape, in Croydon, on the leaseholders.
If successful, the leaseholders claim that they will have to pay up in full by March, while FirstPort CEO Nigel Howell tells LKP it is to be “an initial contribution” only, not the full amount.
FirstPort also said: “The Government has pledged to offer support to owners and residents of high-rise buildings. However, given the pressing need to undertake these essential safety works and the potential costs to leaseholders, we and others in the property industry welcome any clarity the Government can provide on what support will be made available.”
The bill adds up to just over £20,000 for each leaseholder.
The case is one of 17 now heading for the property tribunal.
The Guardian reported the issue this evening:
Tower residents face £2m recladding bill prompted by Grenfell disaster
Owner of Citiscape complex in Croydon has denied responsibility to pay for work, with leaseholders left facing a bill of £31,300 per flat “Terrified” residents of a housing complex clad in similar flammable panels to Grenfell tower are facing a bill of £2m to make their homes safe after the building’s owner said it was not its responsibility to pay.
And even the New York Times:
U.K. Asks, Who Pays to Prevent Another Grenfell Tragedy?
Some Citiscape residents have said the cost of replacing the cladding is so high that they might be unable to afford to stay in their homes. Until the work is done, fire marshals are patrolling the building, and the residents expect to be billed for that cost, too.
And BBC at 23.43:
Grenfell-like cladding bill reaches £2m
Residents of a privately-owned London tower block with the same cladding as Grenfell Tower may be forced to pay up to £2m for replacement panels. Citiscape in Croydon was one of 228 buildings across the country to fail fire safety tests set up in the wake of the disaster which claimed 71 lives.
And MailOnline:
Residents in block with Grenfell cladding face £2m bill for…
Residents living in high-rise flats may have to pay a huge bill to replace cladding It has the same cladding which was used on the Grenfell Tower in west London Leaseholders at Citiscape in Croydon may have to fork out £2million to replace it Residents in a privately-owned high-rise block with the same cladding that was used on Grenfell Tower may be forced to pay £2million for replacement panels to be installed.
And the Independent:
Grenfell-like cladding bill reaches £2m
Residents of a privately-owned London tower block with the same cladding as Grenfell Tower may be forced to pay up to £2m for replacement panels. Citiscape in Croydon was one of 228 buildings across the country to fail fire safety tests set up in the wake of the disaster which claimed 71 lives.
Communities Secretary Sajid Javid wrote to local MP Steve Reed: “I urge those in the private sector with responsibility for resident safety to follow the lead from the social sector and private companies already doing the right thing and not attempt to pass on costs to leaseholders.”
To date only Legal and General, the freeholder at the Blenheim Centre / Reflexion site in Hounslow, west London, has agreed to pick up the bill, estimated at £10 million.
It is doing so for reputational reasons, and because it owns a shopping centre below the flats which also needs cladding to be removed.
It was always wildly optimistic that other freeholders would follow suit.
FirstPort is the largest residential property management company in the country, with around 165,000 flats under management.
Until his arrest by the Serious Fraud Office in February 2011, FirstPort – then called Peverel – was owned by property tycoon Vincent Tchenguiz.
Along with other assets it was pitched into administration, from which it was revived by venture capitalists Electra and Chamonix and loans secured against a portfolio assets including house managers flats in retirement complexes, with leases issued in 2009, which in some unexplained fashion ended up belonging to the property manager.
LKP and the Campaign Against Retirement Leasehold Exploitation, now www.BetterRetirementHousing.com, have attempted to obtain an explanation of how these leases were created and how they have ended up in FirstPort’s possession, but without success.
The Tchenguiz organisation, described by a judge as “quasi biblical in complexity”, is ultimately controlled by the so-called Tchenguiz Family Trust in the British Virgin Islands.
At Citiscape the freehold is owned by its company Proxima GR.
At Heysmoor Heights in Liverpool leaseholders are being asked for £18,000 each for fire marshals and removal of cladding and may face forfeiture of their homes if they cannot pay up.
Unknown – and unknowable – individuals are behind the freehold company, Guernsey-based Abacus Land 4 Limited. The company is administered by the £1.7 billion Long Harbour / Home Ground fund run by Will Astor, David Cameron’s brother-in-law, who worked for Vincent Tchenguiz for six years.
Citiscape leaseholders claim that they include “pensioners, single mums and low wage income earners”.
A press statement they have released claims that “all monies” will be due in March 2018.
“In addition, the quote estimated at £2 million could escalate to a much higher amount, resulting in each leaseholder having to find up to £31,300 by March.
“Add to this the cost of fire marshals, already in place since June 2017, totalling £300,000 per year until cladding work is completed.”
Residents are quoted:
Anuj says: “We feel betrayed by central Government and Croydon Council for turning a blind eye on our situation. Why can’t Croydon Council support us in the same way Slough Council supported the residents of Nova House where they purchased the freehold and took over the responsibility for the fire wardens and cladding replacement?”
Alexandra, who is a charity fundraiser, said:
“I have to pay more than I earn in one year salary in six weeks for something I am not even responsible for.
“I’m very worried about the prospect of losing my flat.
“I have contacted Estate Agents to try and sell it but they told me this flat will never sell under those circumstances. My equity has also become negative since this debacle.”
Richard says: “My 95-year-old father has resided at Citiscape since 2004. These horrendous costs for cladding and firewatch are unreasonable to make from a pensioner receiving only the state pension being barely sufficient to cover the winter bills and his daily upkeep.”
FirstPort CEO Nigel Howell provided the following statement to LKP:
As you know, following the tragic fire at Grenfell Tower last year, FirstPort carried out checks of the properties we manage that may have been be fitted with a similar type of cladding. At Citiscape, we found that the cladding was unsafe and immediately implemented a fire watch to ensure residents’ safety.
At the same time, we commissioned an independent surveyor to review possible costs of replacing the cladding. This total cost has now been estimated at between £1.8 million and £2 million, depending on the construction methodology applied. We understand that this situation is distressing for residents and we are taking a range of steps to support them. Residents are now being consulted on the methodology and it is important to note that these figures remain estimates until we have undertaken a competitive tender process (which will also be manged by the independent surveyor).
As the property manager, we are obliged to discharge our responsibilities under the leasehold agreements. In the absence of alternative sources of funding, our interpretation of the individual leases at Citiscape is that the cladding replacement works, as well as interim measures such as the fire watch, are shared building costs and should be met through service charges. Of course, we recognise that this is a very significant cost, so have referred the case to the First Tier Tribunal to independently review this interpretation. As you say, the hearing is currently scheduled for 6 February.
We are committed to supporting residents through this process. We have not requested payment of the full costs by the end of March, but an initial contribution should the FTT find that the costs are to be met by leaseholders through service charges. Beyond this, we are organising an open evening where residents can discuss the issue with independent specialist advisors. We have met with Steve Reed, the local MP, to brief him on the situation. We continue to encourage Citiscape homeowners to establish a residents association and to seek independent legal advice.
Our first priority is and will always be residents’ safety. We are working through this complex situation with as much sensitivity as possible and cooperating with residents to find a solution.
In addition, FirstPort provided a formal statement:
“We are working hard to ensure residents are safe and supported during what we know is a challenging time. We recognise that the potential costs are significant and are committed to minimising them, while putting residents’ safety first.
“As the property manager, we are discharging our responsibilities under the leasehold agreements and working with residents as closely as possible to find a solution to this very complex situation.
“The Government has pledged to offer support to owners and residents of high-rise buildings. However, given the pressing need to undertake these essential safety works and the potential costs to leaseholders, we and others in the property industry welcome any clarity the Government can provide on what support will be made available.”
Related posts:
Barratt pays out to remove Grenfell cladding at Citiscape
John Healey says it’s ‘wrong’ for leaseholders to have to pay to remove Grenfell cladding
Barratt evacuates Grenfell cladding site Citiscape
Tribunal rules Citiscape leaseholders must pay to remove Grenfell cladding. Will this mean some lose their homes?
Sajid Javid calls for Grenfell cladding round table with developers and freeholders … and LKP will be invited
£150m for ground rents … from a semi in Hendon
thats one of the perks of being a freeholder. In the eyes of the law, freeholders seem to have No responsibilities, only rights…
This is an opportunity for the leaseholders at Citiscape to galavanise al la the NLC and organise a peaceful demo outside the Court on 6th February. The relevant authorities will have to informed and placards made.
I will offer my support to Citiscape Leaseholders if they wish to protest.
NO ACTION- NO JUSTICE!!
As I understand it Proxima GR and Firstport (originally Peverel) had been connected companies until they had to be separated in order that the Peverel side of the business could come out of administration?
Clearly a large project such as replacing cladding is “manna from heaven” for FirstPort.
It is my belief that if FirstPort were to close down as I write this post (I wish!) and all their assets were realised so that debts could be paid off there would be a net liability remaining of some £35,000,000.
It should never be forgotten that this is a company that systemically priced fixed the elderly and vulnerable residents living in at least 65 retirement developments and who offered a “goodwill gesture” amounting to around £100,000 in credits to development service charge accounts when the scandal was estimated to have netted them £1,400,000.
And as for Tchenguiz any extra he can pocket is great news as he prepares to defend a multi million pound law suit against Grant Thornton..
Just how hard did Firstport work to ensure the safety of residents at Gibson Court?
Whilst I accept this is a crisis which is not of Firstport’s making (for a change) would it not be judicious to await the FTT ruling before collecting any payments from residents?
An interesting question has just been posed on the NLC website? Does anyone know if Cityscape was built with the cladding or was that installed at a later date?
Hopefully some of the Citiscape leaseholders will comment on LKP/ NLC sites.
I hope they galvanise and become a collective force to take on “ Firstport”.
They would do well to join the NLC and and learn from Katie Kendricks indomitable spirit. Look what the NLC have achieved in 1 year……….. BRILLIANT.
The NLC campaigners made themselves heard by organising peaceful protests and not allowing themselves to be cowed by empty threats.
The only way citiscape will get justice is to fight for it. Nobody else will do it for them. I wish them well and will wholeheartedly support them.
As I, Michael( aka The scourge of Peverel) slept last night I started to dream about Citiscape Firstport and Tchenguiz. Just as I got to the point of my dream where Tchenguiz was going to introduce me to his peroxide positive female companions, who I intended to compliment them on their great legs and as a chat up line ask if their favourite TV comedy was “Open all hours?” I woke up.
The reason for my dream became immediately apparent as I had left the radio on and Darren Adam on LBC was covering the Citiscape scandal. He was absolutely scathing about the conduct of Tchenguiz and Firstport.. I was allowed on air and was able to put several points over and give a brief history of Pevere/Firstport/Tchenguiz, and the unfairness of leasehold and how leaseholders could be exploited. I told listeners that Legal & General had paid for cladding replacement for a block they owned. .I was also allowed to mention About Peverel and LKP several times which was repeated back by the presenter..
Crazy idea of the day?
Should the FTT rule in favour of Firstport and residents be forced to foot the bill for cladding replacement how about asking the tribunal to rule that due to wholly exceptional circumstances that gave rise to the need for replacement and the undue financial hardship that payment would cause the amount to be paid by leaseholders should be paid over the lifetime term of the lease? £31,000 over 100 years is much more manageable? That said the bill is likely to be much less. What tends to happen (particularly when Firstport is involved) The true cost may well be nearer £20,000 per flat. Firstport will put the work out to tender and accept a quote for £24,000. They will then make much store of how they “saved” leaseholders £7,000! If I were a leaseholder at Citiscape and were going to the FTT I would make sure the FTT were aware that both freeholder and managing agent had a direct financial interest in a ruling in their favour that extends beyond the immediate issue of responsibility of who pays for the cladding replacement. If leaseholders are ordered to pay but can’t(not unreasonable given the amount they are being asked to pay) they can have their properties forfeited by the freeholder who will gain from the entire value of the asset. the freeholding parent companies are in severe financial distress and have defaulted on several loan agreements. The managing agent’s parent company ha a negative worth of £-35,000,000 and is only trading due to an assurance by backers that they will continue to be funded in the near future.
Wow Michael ( Scourge of Peverel) you are smoking hot!! I sincerely hope the leaseholders of Citiscape are reading your comments and will take heed. They must be proactive.
P.S. Incidentally, I received the directions from the County Court RCJ relating to the “ Defamation “ / “ Harassment” claim against me by a Managing Agent……………..
The case will be heard between the months March – June. I will post the hearing date when it is known and invite my fellow comrades to pitch up with their sandwiches and listen in. Should be interesting.
I am not aware of an agent suing a client for the above. although I believe I recall reading that the bastion of rectitude “ Mc Carthy and Stone” sued a newspaper for Defamation???
Unsafe cladding perfectly exposes the ‘fundamental flaw’ of leasehold (as described by government in 1998).
The reported comments by Sajid Javid suggests he has not grasped the full horror of leasehold: leaseholders have no right to decide what is done to the premises, only a liability to pay all communal costs (subject to the lease and reasonableness).
Cladding is only one example, so it’s worth stepping back to see why LKP is right to say “It was always wildly optimistic that other freeholders would follow suit.”
Why should they? Would you? Take it one step at a time…
A new build/conversion comes with a warranty and insurance for registered builders and developers. For this to apply, the developer must build to the published standards and must correct all defects at their own expense. Such warranties run for ten years. They will cover breaches of building regs and dangers to health and safety and contaminated land issues etc.
But this supposes that standards are fit for purpose and inspections likewise. The failing in respect of cladding is that the ‘experts’ failed to be fire experts and the government deregulated inspections.
If cladding failed existing standards, the innocent layman might hope somebody among the ‘expert’ chain of command would be liable for the cost to put the problem right? How would this work on such a large scale?
And what happens if an integral serious defect goes unnoticed beyond the first ten years? The innocent layman might hope that building insurance would cover such hidden defects, including unsafe standards applied at build or perhaps during later repair.
This conundrum affects all homeowners.
But it is the particular way that leasehold passes on all costs without giving any right to participate in any decisions that produces the obvious scandal for leasehold ‘home owners’. It is a one way street. The easiest answer to any conundrum is to pass on the cost under the lease.
I have read case law where a freeholder was held liable under landlord covenants to put right damage caused by contaminated land and thus free to pass this cost on in the service charge. The fact that the contamination self-evidently predated the building did not exercise the mind of the Lands Tribunal as to third party liability.
Same with pre-existing ancient boundary walls etc.
I’m not sure the lands tribunal strays beyond the lease – given their often seemingly simplistic approach to leasehold: the freeholder decides what is done/ the leaseholder pays all costs. Nobody else is involved.
The added twist with leasehold is that freeholders have no financial liability for repairs/ maintenance arising under a lease (developers get to write the leases after all) and any potential testing of a legal claim against anyone else (for defective standards etc) is not a dog they need to feed.
Simply pass on the cost.
The interesting question, as mentioned above, is whether this unsafe cladding was added post sale of the original leases. This adds another layer to the leasehold scandal.
Leaseholders have no right to a say in what is done to the premises they own a demised title within (just a lukewarm right to be ‘consulted’ and that ‘right’ comes full of holes).
They can be charged for what may turn out to be poor standard or unsafe methods and materials. There is no mention I can find that once so charged they have any insurance against subsequent discovered defects? Basically if anything goes wrong they seem to pay again? Perhaps more than once?
This is where the concept of reasonableness would, to a mere layman, seem to have a role. If charged once, why be charged twice for the same thing to correct the first mistake?
But I would not hold any breath that the courts would stray far down that path.
The various cases coming up to tribunals on dangerous cladding will, I suspect, explode the myth once and for all that buying a leasehold is ever prudent.
Ironic also that, despite Grenfell happening last June, multiple ‘expert’ submissions to DCLG later in the year claimed that leasehold was well tested and on balance a working tenure model.
For whose benefit?
How would exercising RTM or collective enfranchisement help leaseholders stuck with an unsafe building?
Nigel Howell’s response has clearly been through the “legal mincer” his words are very carefully chosen?
A very pertinent question has been raised by “Chas” a regular contributor on the About Peverel website.
He asks “When was the cladding installed at Citiscape? Was it deemed an “improvement” and if so is an improvement the liability of leaseholders?
If the fitting of the cladding could not be charged to leaseholders, it seems obvious that the replacement cladding could not be charged to leaseholders either?
Nigel Howell is keen to stress that Firstport are the managing agents for Citiscape.
This is disingenuous. Of course a mere managing agent would not be responsible for the cost of replacement cladding. A landlord/freeholder are responsible. The issue is as to whether the landlord/freeholder can recover those costs from leaseholders?
Would Mr Howell like to avail himself of the opportunity of being a little bit more candid about who the landlord is for example? Could it be by any chance Firstport?
I am particularly intrigued by the comment “In the absence of alternative sources of funding”
What does that mean Mr Howell? Are we to assume that Firstport do not have sufficient funds to pay for cladding replacement? Would they not have access to the markets to raise any funds they need? Or are they so financially stretched (The Knight Square accounts show a net asset value of £-35,000,000 and their bankers are ordering a debt reduction of £2,000,000 per year)