Cladding scandal

I've only been following this in a half arsed fashion but it seems really incredible. 

https://www.theguardian.com/uk-news/2021/apr/29/leaseholders-horrified-…

1.3m flats now basically unmortgageable. I nearly bought a shiny new flat like that before i ended up going more traditional with my one in Pimlico. No idea what the cladding situation would have been but i definitely wouldn't have thought to ask.

meanwhile those to blame for this seem to be getting away with it or have declared themselves tactically bankrupt

As a non homeowner my field of fooks is remarkably barren.

Or does this affect me because it reduces the supply of buyable properties and so increases the prices of the ones I should be interested in? If so, this is grossly unjust.

I don't understand why they voted down the protection for leaseholders.

And have the folks who deliberately falsified the test results on the cladding that ended up used in Grenfell been thrown in jail yet?

Or does this affect me because it reduces the supply of buyable properties and so increases the prices of the ones I should be interested in? If so, this is grossly unjust.

hard to tell, suspect it means the price of flats with cladding (even ones proven to be safe) will drop signficantly as people wont go near them.

My m7 in Manchester has a city centre flat and was waiting on the outcome of this - I guess its resale value is now zero.

Not personally affected, but the whole thing is a disgrace with massively unfair results.

IMO the government needs to foot the bill fix it asap but also go after those responsible with a vengeance.

basically a life of neggy equity for a lot of the buyers in london i'd guess

I don't understand the government on this. Aren't homeowners more likely to vote Tory?

Assume property developers make up a large section of Tory donors.

Given the govt lets builders build shit houses and profit enough to pay Persimmon's ex-boss £100m for 1 year, I suggest they invite them to cough up or be banned from developing any land in the UK for 10 years and have their existing land banks compulsory reacquired for £1. I expect they will come up with a solution pretty quickly at that point. 

It is a scandal and probably the govt. should bail the leaseholders out (on the basis that a shit building regs regime was ultimately to blame?) but , playing devil’s advocate for the moment, if the leaseholders’ don’t have a claim against the developer, their  surveyor or solicitor on purchase, the freeholder, the buildings insurance, or anyone else then why should the taxpayer bail them out anymore than anyone else who without fault makes a bad property investment where the party to “blame” (for whatever reason) can avoid liability or has no assets/money?

Having had dealings with Persimmon on a number of occasions I can confirm that they are slime balls. 

Surely if the "government foots the bill" its essentially a subsidy from non-homeowners to homeowners? This is regressive, albeit in line with Tory MO.

 

 

Why should the my taxes bail out the property owners? (Well, not MY taxes obvs but all of yours)

taxpayers and a small subset of property owners who made a bad bargain? caveat emptor. ?

Limited liability does need substantial reform. Bring back debtors prisons

It's a bit like taking on risk for change of law, usually sits with buyer.

The idea that this government would hurt property developers in that way (total bill appaz £15bn of which the govt will fund £5bn of taxpayers') is risible.  Lest anyone forget, Jenrick/Desmond was less than 12 months ago ... 

I think they should pass special legislation allowing these leaseholders to pierce the corporate veil and recover from all shareholders directors and senior management of the developers, past and present for the cost of putting right these buildings irrespective of an insolvency laws (which should be supsend for these people only)

the devlopers would be able to find the money themselves pretty quickly.

I don't understand why they voted down the protection for leaseholders.

Because the Tories represent the landlords.

Government should sort it, not on principle, but because of the scale of the problem and because it is in the national interest to have more available housing and a functioning housing market. If they don’t, this will drag on for years and years.

I agree with the sentiment that more should be done to prevent the responsible parties from hiding behind corporate veils. Another reason for the government to take charge instead of leaving it up to the victims to fight an impossible battle.

1. Offer to buy back everyone's flats for what they paid for them. 

2. Compulsory fix of everyone's cladding split between then flat owners (i.e. including Gov). 

3. Fill all the purchased flats with council tenants. 

4. Buy out the holdouts for less than they paid for them given 3. above.

Nobody profits, nobody goes into neggy eqy, all the buildings get fixed and loads of new council homes.

Not appropriate to pierce corporate veil if developer/landlord complied with relevant law/standards at relevant time. Risk, harshly but rightly, sits with buyers.

This means a couple of million people have today been told their homes are worthless and unsellable / unrentable unless they spend a significant sum of money rectifying the problem.  We are talking tens of thousands of pounds.  Most people do not have that sort of money and would have to borrow it over many years to make good the situation.

If the buildings met the fire regs at the time, then it looks like they have been unfortunate victims of a change in the law.  If the buildings only met the fire regs because the developers lied, then I am of the view directors / developers should be held personally accountable in a  'lift the corporate veil' type situation.

I am in a post-Grenfell new build which is less than 18m tall.  I had no problems remortgaging last year but I know someone who tried to sell a few months ago and their buyer could not get a mortgage because the building does not have a EWS1.  

We have since had a letter from our management company confirming that the cladding on the building meets all post-Grenfell fire safety regs and that we do not require a EWS1.  Obviously we have all breathed a huge sigh of relief.  

This is a national scandal which has basically f*cked a lot of people financially for life.  It will also distort the property market as a couple of million flats are now unsellable and effectively off the market ad infinitum.

How is this any different from

the govt changing the law so that you can’t rent out a flat unless it has a particular energy rating?  I didn’t get any compo for that 

what escaping puppy and arbiter sed

it is a fooking disgrace

gov needs to create a fund (a proper one, at least 15 billion, not the 3 billion they propose) to fix

to be funded by a tax on land values (if you tax the developers they will just pass the cost on to the consumer)

My understanding is leaseholders in these properties also have to pay thousands of pounds a year for a 'waking watch' for fire safety reasons, which generally involves some bozo in a high vis tabard sleeping in a Portakabin outside.  

If I was in one of these flats with minimal equity and a liability for repairs and a waking watch, I would basically throw the keys at the mortgage company and fook off.

gsm there was a long lead in period, plus we are talking six figure sums here for leaseholders not a poxy refit to ensure that the property you rent out actually has working insulation

I would basically throw the keys at the mortgage company and fook off.

That is not a thing in this country. Or at least not one which prevents subsequent bankruptcy. 

Surely it’s the principle that’s important. Otherwise it’s just disgusting money grubbing

Change in law affecting existing property results in compo. 

It's a complete mess.

There is a new levy on developers which is intended to cover some of it but not sure how much it will actually cover.

There is now a grant scheme that can be applied for to cover some of the cost together with a loan scheme where the loan would be attached to the flat and just pass from owner to owner until eventually repaid.

The main issue is the lack of qualified surveyors which means blocks are stuck in limbo trying to get an inspection to find out if there's a problem.  Some of the blocks will not have a problem but others will.

The real kicker is that building inspectors all over the place have been signing off stuff that was sub-standard or having defective work hidden from them so they've signed off a load of buildings that have other fire safety problems which have nothing to do with cladding but which are being uncovered by cladding inspections and there's no help with the cost of sorting those problems which may involve structural works to put in fire barriers that weren't properly installed.

In short this shit show is going to run for decades.

The issue is that developers keep passing on the liability to building contractors, professional consultants, insurers who keep blaming each other

The companies that designed the cladding are passing the buck because they say it was not suitable for tall buildings - so the building contractors or developers who procured the cladding are at fault. To oversimplify the argument, if I buy Play-Doh to shore up my war, and the war collapses, you can’t blame the manufacturer or designer of the Play-Doh

The building contractors that bought the cladding and built the buildings blame the cladding manufacturers and salespeople for misrepresenting the characteristics of the cladding

Meanwhile a lot of these flats will have been built under design and build contracts, under which the developer passes on all liability for designing and building the buildings to the building contractor

I guess the inspectors can get out of any claims against their PII because they were lied to by developers?  The developers have since moved on ergo the leaseholder is stiffed with the cost of repairs and no-one to go against.  

And as Sails points out, there is also the fact that building inspectors signed off defective premises. Which a lot of the participants in this fiasco are pointing at.

The other issue is that disclosure in any proceedings will be a complete bitch. The nature of modern building contracts, which involves an extremely high level of outsourcing, means that any litigation will be incredibly complicated, and long winded. Just getting hold of the documents from all the different parties is incredibly difficult, especially as a large number of the parties involved nationwide have gone insolvent. 

Some lawyer, somewhere, will make an absolute fvucking bomb litigating this over several years before telling the Claimants that they are ditching it because it is in the 'too difficult' box.  

This is a disgrace. It's a change in the law that has made people's lifes work worthless. Govt should meet costs of rectifying.

"Some lawyer, somewhere, will make an absolute fvucking bomb litigating this over several years before telling the Claimants that they are ditching it because it is in the 'too difficult' box. "

 

They have been quite a few who have been offering webinars for affected leaseholders. Looking to pounce presumably. 

There is a gap in the market perhaps for litigation funders to step in, as in the post office litigation. However, this is the case that is 10fold the complexity of the post office case, so many  funders won't be enthusiastic about it

The overwhelming problem is that each development is different, so facts will be different. 

Who were the wideboys who pushed the shitty cladding? Refuse to believe they can't be identified and fooked.

I think the cladding companies themselves have folded without a trace

Probably fly-by-night builders or contractors who setup and dissolve companies willy nilly.

clergs - there are a number of cladding manufacturers, if you have been following the Grenfel enquiries that is a good place to start

The issue is that ACM cladding is apparently relatively new as a concept, and that when they were being sold there were tons of disclaimers that was slapped on them, which the company is buying the cladding did not read

Its a tough one this. Feel awful for the owners but:

- It really isnrt right that tax payers generally (many of whom never bought or owned property) bail them out

- not sure an LVT is solution either. There needs to be some moral hazard. Why should property owners that bought more sensibly have to bail them out either?

Maybe people will be a bit less willing to overpay for poky property in Cities, now they can see the attached risks. Properry market might be a bit healthier with some high profile examples of it not being a one way ticket to riches/UKs only viable savings mechanism.

Certainly worth exploring how to go after rhe developers and their owners. But also the mortgage cos. Maybe let people hand the keys in. Would also question whether all the new reg is necessary. All reg seems to creat exortbitant costs. I suspect most of these people would prefer to live somewhere that is a bit leas safe (but lets face it still very unlikely to kill them) than have their lives ruined financially.

Or, as this is fundamentally a legislative failure, (switching from poor underregulation suddenly to a panicky overregulation) maybe MPs and members of politcal parties should be asked to pay up if the developed (whom they are suspiciously close to) cannot be traced....

Yes risky the Grenfell cladding material was from a French parent company. Installed and approved by British developers and regulators. We aren't going to get the French to pay for it. Although that would be lolsome.

LOL @ why should taxpayers bail out homeowners. Govt's "prices must always increase" have been doing this for years, and the leverage it's given homeowners has propped up whatever you have been doing.

In any event, the govt bailed out homebuilders with H2B. Time to give it back. No no we'll just go and build houses abroad - oh. 

Finally, the govt knew all about this from Lakanal House, and still let thousands of homes be built, so the moral obligation has been on them for years to sort it. 

The real kicker is that building inspectors all over the place have been signing off stuff that was sub-standard or having defective work hidden from them so they've signed off a load of buildings that have other fire safety problems which have nothing to do with cladding but which are being uncovered by cladding inspections and there's no help with the cost of sorting those problems which may involve structural works to put in fire barriers that weren't properly installed.

 

Why can’t those inspectors and installers be sued? 

My understanding is leaseholders in these properties also have to pay thousands of pounds a year for a 'waking watch' for fire safety reasons, which generally involves some bozo in a high vis tabard sleeping in a Portakabin outside.  
 

The ultimate in safetyism. Fire brigades can demand these walking watches and the owners have no say. I wonder how many of the providers are owned by former firemen....

I own a flat in central London. I'm not concerned about this because: 1) I think my block has been certified as "safe"; 2) even if 1) is insufficient for some reason and I want to move and sell, but can't, I'll just let it out; the idea that you can't let out a flat in central London is bonkers. If you think the market has fallen because of covid etc, try renting something now on the cheap centrally and see how it goes. 

But yeah pretty shitty for those affected. It's all H&S gone mad in my view, the idea that cladding is unsafe is just a bit over the top. The Grenfell disaster was due to appalling fire service response/advice, not de to cladding. 

the idea that cladding is unsafe is just a bit over the top

Fire

I'm sorry to say by the way, but all the Team Covid (or whatever you're called) would have perished in the Grenfell. They would have listened to the "stay put" advice, and thought "yup, the experts have told us as such, we will stay put no matter how smoky it gets". 

And stupid people not leaving like moggy said. If had been full of rich posho twats like moggy no one would have been killed.

So it is smart to follow advice which leads to one's demise? Ok.  

There is an alternative. They can install a sprinkler system. It's slightly ludicrous to say it's H&S gone mad when people are in a building with an increased fire risk. 

A clear role of the state is to rectify market failure. Housebuilders exploit loopholes by having an SPV shell construct the building, using a separate developer for the building works. They then appoint a shell property management co to tell residents what to do, knowing diversity of ownership makes it hard to hold the management co to account. There was a clear duty of care to people, especially after Lakanal House, but developers have deep pockets and "complied with current standards" to fall back on. 

If we are bailing out people by the sea with sea defences, and people flooded out living right next to rivers, then I don't see any less of a moral imperative to fix this situation when there is a clear bogeyperson in all of this that has exploited leasehold law, help to buy and customer ignorance to rake in money. It's £10bn, which is sod all. Just tell the developers to sort it, or we'll impose a 5% new build tax for anyone other than self-builders. I expect there will be Barratt and Persimmon sub-contractors crawling all over these developments within a fortnight. 

Do you think that decent sprinkler systems are more or less expensive than cladding removal? Maybe.

Do you think that internal sprinklers would prevent the external inferno that wrecked Grenfell?

Given the amount of money these property companies are spending to bank roll the election campaign for northern tory MPs, the conservative party will not shaft them - in fact play to their tune as they are doing. 

Banana they are already imposing a new build levy.

Crypto most of the inspectors work for local councils so it would be government suing itself.  Also they can’t be on site all day every day and they just inspect certain elements at certain stages so a little unfair to blame them for what goes on when they aren’t around.  It’s like when other solicitors ask me to confirm a property has been built in accordance with the approved plans despite it being impossible to say every builder did exactly what was shown on the plans.

Grenfell was partly an issue with the windows which were pvc and melted allowing the external fire in.  If the original metal windows had been left in there would have been far less internal damage.

@Sails thanks for that. I didn’t know the inspectors were LA bods. 
 

@Royalty it’s a bit like my bogeymen SAGE. The fire brigades have no reason not to ask for lavish and expensive safety works. They’re not paying. They can’t be (easily) challenged. If something goes wrong and they didn’t demand a womble watch then they’re in the shit. They’ve every reason to impose safetyist measures and none to take a risk. The leaseholders have, arguably, more standing to balance their competing needs and demands (ie safety and risk to their own lives against cost). 

arbiterofgoodtaste has come up with a decent idea.  I'd give you my vote on that

Actual the waking watches are required by insurers as the fire brigade actually have very little to do with fire safety.

Something does need to be done about the manufacturers who falsified safety tests as that is criminal.

What summersails said above re surveyor availability. This is one mega fakin shitshow and there is no magic wand that can be waved. The issues are really complex, it’s not like you can just say ‘well this cladding’s shit let’s get it redone on Monday’.

There is a massive lack of experts/surveyors who can determine the works that need to be done/opine upon whether there was faulty design or workmanship and contractors who can do any remedial works are incredibly busy. And post-Grenfell everyone is taking a massively conservative view of safety when being a bit more pragmatic might actually lead to the really dangerous buildings being sorted as a priority.

There is absolutely nothing surprising about this.

It's just another example of the inability of anybody in the western world to judge risk.

The response oh the people who used this building material should be locked up completely misses the point.

The market is not accurately judging the risk, the market is just nuts. It's nobody's fault.

So so SO glad mine got fixed under the NHBC cover and that we have EWS1 forms ready to go. It was a lot of worry and shit tonne of annoying building work for like a year, but it could have been so much worse.

this validates my aversion to mass produced built to be rented flats 

Spurius it's hard to judge the risk though when one party covers up what they know and materially misrepresents the risk.

They could raise the funds with a planning gain tax on new build / new planning (beyond the s106 scheme) - so they indirectly hit the developers going forward as a way to claw back what has happened in the past. 

Given the amount of money these property companies are spending to bank roll the election campaign for northern tory MPs, the conservative party will not shaft them - in fact play to their tune as they are doing.

NOBODY IS PREVENTING THE HOME OWNERS FROM DONATING TO THE CONSERVATIVE PARTY TOO

SOMETIMES YOU HAVE TO SPEND MONEY TO MAKE MONEY

The landlord should be responsible for ensuring that the property is safe and part of being entrepreneurial is assuming the risk, so cough up landlords.

 

RofRoyalty - I appreciate you are being facetious, but I expect sprinklers v waking watch plus cladding removal costs is more a case of cashflow management rather than overall cost differential. Residents were, rightly in my opinion, hoping cladding removal would be resolved quickly thus keeping waking watch costs down. In any event, there's no downside to having a sprinkler system and if there were sprinkler heads in the flat in question I expect the fire would not have reached a high enough temperature to get out of the building. 

Loads of the "why bail these people out" types on here will be getting lots of govt help in other ways but completely discounting it. Also one to ponder if you are staycationing this year - your AirBnBs will likely not comply with fire reg requirements at all so don't come crying on here when your kids burn to death because there were no suitable escapes, the property was full of dodgy furnishings and there were no smoke detectors, all of which would be a requirement for the "overpriced" hotel down the road. 

Probably the best fudged outcome in all this is the govt offers interest free loans to get it repaired, and the developers are strong-armed into doing the work. The flats can come with a land charge so that the loan contribution is paid out of sale proceeds. 

 

CL the landlord will be most likely be a shell SPV. About as worthwhile a target as the shell SPV guarantee providers govt was satisfied with on train operating contracts. 

Banana there are a number of reputable short stay accommodation providers who insist on properties meeting all the relevant rental safety criteria.

is this your side hustle sails? why do you insist on it when Airbnb don’t? how do you monitor/enforce compliance? or is it just arse covering?

It’s all part of persuading people it’s not the Wild West and that they won’t end up with an orgy in their property.  If people see you checking them and making sure they comply with the rules they trust you to also vet their guests in a similar manner.  We check properties on a regular basis, don’t list them if they don’t comply and can terminate our agreement with the home owner for failure to comply.  Airbnb are the only ones who are quite so lax and sites like Marriott Homes and Villas have much tougher standards.

might have a new property for you later in the year sails