Grenfell Type Cladding and Leaseholder Costs

Grenfell Type Cladding and Leaseholder Costs

Following the Grenfell tragedy, many leaseholders may be worried about the cladding on their properties and, where it needs to be replaced, whether it will be they who will have to pick up the cost, says David Lawrenson of LettingFocus.com.

This is a real concern if the cladding on your building has been found to be of the same type that caused the Grenfell Tower fire.

Where unsafe cladding has been found, fire watches have now been deployed in effected buildings, which of course, also comes with  a heavy cost.

So, what should leaseholders do? Where does that leave them?

Leaseholder Should Check Leases to See Who Pays the Cost

The first place to look is at the terms of your lease.

For the exterior, normally the landlord or the management company will be responsible for the upkeep, for which they then recoup the cost through the service charge levied on the leaseholders.

For fire watches, again, leaseholders should check the lease terms. Normally, this will also be recoverable under the service charge too, as a cost of upkeep and maintenance of the building.

Grenfell Type Cladding – The Developer’s Fault?

Many leaseholders will be saying, “Surely, this must be the developer’s fault and therefore could a claim be made against them?”

Unfortunately, not necessarily.

As long as the developer  or contractor met the building practices which were lawful at the time and obtained the required buildings control sign offs, then any action against them is likely to fail. (Bear in mind too that a large part of the developer’s liability after completion shifts onto the build quality insurer – often the NHBC – after completion).

Grenfell Type Cladding and Citiscape in Croydon

In a recent case of First Port v the leaseholders of Citiscape, a block in Croydon, which has Grenfell type of cladding, the First Tier Tribunal decided that the costs of both the fire watch and the costs to remove and replace the cladding were both recoverable from tenants.

And so it looks like this will remain the default position for most cases, unless and until another higher court says otherwise or there is an intervention from government.

But costs must be reasonable and the requirement remains for the landlord (freeholder / management company) to consult with the tenants (leaseholders) regarding the proposed costs of the works and those costs must be fair and reasonable.

In the case of Citiscape, cladding costs of between £1.8m and £2.6m were found to be not reasonable.

Of course, the key thing is to get your building safe as soon as possible, whilst keeping your right to challenge costs at a later date.

In the case of the Citiscape block, the developer, Barratt Homes has offered to meet the costs of both the fire watches and the cladding removal and replacement, irrespective of the tribunal hearing.

Other leaseholders may not be so lucky. (Barratt Homes may have taken this step for PR reasons and because, as a very big builder, it can afford to and given its possibly limited exposure to cladding in other blocks). Other developers may not be in a position to make such a generous offer.

Leaseholder Costs Showing in Reduced Value of Flats

Leaseholders in effected blocks will, of course, have found the value of their flats has sunk and their property may be unmortgageable for any new buyer, until the costs of putting the cladding right are paid for.

It’s a very sorry situation to be in for the leaseholders.

 

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