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The new cladding scandal that could bankrupt a generation


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https://www.spectator.co.uk/article/the-new-cladding-scandal-that-could-bankrupt-a-generation

Within the next year or two, I could go bankrupt. My mistake: to join a government-backed affordable housing scheme and purchase a one-bedroom flat in east London. For the past four years, it has been my pride and joy — not to mention my savings, my pension and my financial future. I was grateful for the government’s help in getting a foothold in the city. But now another government policy is hurtling towards me, against which I have no defence. Nor do potentially tens of thousands of first-time buyers and the owners of affordable housing in my position. It might be the next big scandal to hit the government.

It’s about cladding. Three years ago, the tragedy at Grenfell showed what can happen when you get this wrong: insulation added for environmental reasons turned out to be highly flammable. The residents were living in a death trap, and when a fridge caught fire, the tower block became an inferno. This, of course, raised the immediate question: how many others are living like this? The answer, it turns out, is all too many — 600,000. Including me.

Or so we’re now told by my housing association. We’ve been warned that the cladding covering our block of flats, along with 11,300 other buildings across the UK, is potentially combustible and has to be tested. Should it fail those tests, the cladding will have to be replaced — and that huge financial cost will most likely fall on leaseholders. You might think this is unfortunate, but is it really a disaster? Unexpected expenses are, after all, one of the normal pitfalls of home ownership; in the great Monopoly game of life, you pick up a Chance card that has you buying a new boiler, fixing your roof or treating subsidence. Is cladding so different?

Since I can’t sell my home or remortgage, my property is technically worthless

The answer is yes. First, a good survey can protect you against repair bills. There was nothing to protect me against what turned out to be inept government regulations, which allowed flammable cladding to be fitted. Next is the scale of the cost. The new draft building safety bill — due to be examined by a parliamentary committee — makes clear that leaseholders will be liable for sums of up to £78,000, payable within 28 days. Other home repairs are affordable; this would be crushing.

And all the more so because I’m a shared ownership tenant. I own a 40 per cent stake in my flat (my housing association owns the rest, which I pay rent on) but I’m liable for the whole repair bill. To put it mildly, I don’t have £78,000, or anything approaching this sum. We’re not talking about being sent back to the beginning of my financial life — I’d be sent way backwards. It would take me years of work and savings to pay off the debt.

 

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21 minutes ago, shlomo said:

 

https://www.spectator.co.uk/article/the-new-cladding-scandal-that-could-bankrupt-a-generation

Within the next year or two, I could go bankrupt. My mistake: to join a government-backed affordable housing scheme and purchase a one-bedroom flat in east London. For the past four years, it has been my pride and joy — not to mention my savings, my pension and my financial future. I was grateful for the government’s help in getting a foothold in the city. But now another government policy is hurtling towards me, against which I have no defence. Nor do potentially tens of thousands of first-time buyers and the owners of affordable housing in my position. It might be the next big scandal to hit the government.

It’s about cladding. Three years ago, the tragedy at Grenfell showed what can happen when you get this wrong: insulation added for environmental reasons turned out to be highly flammable. The residents were living in a death trap, and when a fridge caught fire, the tower block became an inferno. This, of course, raised the immediate question: how many others are living like this? The answer, it turns out, is all too many — 600,000. Including me.

Or so we’re now told by my housing association. We’ve been warned that the cladding covering our block of flats, along with 11,300 other buildings across the UK, is potentially combustible and has to be tested. Should it fail those tests, the cladding will have to be replaced — and that huge financial cost will most likely fall on leaseholders. You might think this is unfortunate, but is it really a disaster? Unexpected expenses are, after all, one of the normal pitfalls of home ownership; in the great Monopoly game of life, you pick up a Chance card that has you buying a new boiler, fixing your roof or treating subsidence. Is cladding so different?

Since I can’t sell my home or remortgage, my property is technically worthless

The answer is yes. First, a good survey can protect you against repair bills. There was nothing to protect me against what turned out to be inept government regulations, which allowed flammable cladding to be fitted. Next is the scale of the cost. The new draft building safety bill — due to be examined by a parliamentary committee — makes clear that leaseholders will be liable for sums of up to £78,000, payable within 28 days. Other home repairs are affordable; this would be crushing.

And all the more so because I’m a shared ownership tenant. I own a 40 per cent stake in my flat (my housing association owns the rest, which I pay rent on) but I’m liable for the whole repair bill. To put it mildly, I don’t have £78,000, or anything approaching this sum. We’re not talking about being sent back to the beginning of my financial life — I’d be sent way backwards. It would take me years of work and savings to pay off the debt.

 

blimey

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It's surprising this has taken a while to play out, IIRC this was a requirement since December 2019. I suppose the pandemic wiped out a lot of sales.

The cited complication is that there are only a few people available to make the certificate relative to the number of blocks. But according to someone in this situation, another thing is that even if the leaseholders own their freehold collectively, the certificate must be got via the original developer. 

In this specific case the developer are kicking their heels. Possibly because there are some current disputes over charges (withholding certificate is great leverage), but also speculation is they don't want to do it in case it opens them up to future liabilities if something happens, or they have to disclose some bodges made when building.

 

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Posted (edited)

https://www.glamourmagazine.co.uk/article/dangerous-cladding-grenfell?fbclid=IwAR0jmyYpJHbEZBZtC5M3WV_lShTWCZ6Mg2rhVmEGb-llJdRbVnnSfWW91OI

Glamour speaks exclusively to women leaseholders who are living in a perpetual state of fear for their safety and financial future. It may take years to resolve the issue at a cost of billions of pounds. But who will be picking up the tab? Are leaseholders being thrown under the bus and forced to pick up the pieces? And what is the government doing to address years of substandard construction while also operating under the motto ‘build build build’?

Like many people living in urban spaces during lockdown, 33-year-old media professional Amelia Travette and her partner Nick began thinking about the prospect of moving out of London to be closer to their families. The couple bought a 2-bedroom flat at the Olympic Park in Stratford East London in 2017 under the shared ownership scheme. It’s in a high rise building which was previously the athlete’s village during the London 2012 Olympics and has amazing views of the city. “We’ve been really happy here,” admits Amelia, “but lockdown made us re-prioritise so we started the process of looking at other places.” Little could have prepared Amelia for what she was about to learn next. “In July we received a letter from our housing association telling us that an inspection found ACM cladding on some of the property,” says Amelia. “Initially we didn’t realise what that actually meant. Until you start looking into it, you’re just not aware of the gravity of it all.” 

 I spoke to. Davina*, a 36-year-old professional, was in the middle of undergoing intense IVF treatment last year before the cladding scandal wreaked havoc on her plans. As someone with endometriosis Davina had surgery to clear scarring in her uterus and had started hormone stimulation so that her eggs could be harvested to make embryos. As a single woman she was going it alone with a sperm donor and had saved in the region of £20,000 for a three round package of IVF from a private clinic as she didn’t qualify for NHS funding. To get that far down the road only to have your dreams of becoming a mother quashed because of a potential cladding bill is heartbreaking to listen to. “I decided I couldn’t go ahead with it knowing I could have a £50,000 bill or lose my home. There was no other outcome,” she says. “Losing your home is final. If I lose my home I become bankrupt.” 

Edited by shlomo
IVF treatment
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56 minutes ago, longgone said:

Media professionals and shared ownership don't usually go together.🙈

Those housing associations must have seen them coming. The HA owns most of the property and takes its cut if prices go up when the flat is resold but they don't have to pay for any service charges, repairs or leaseholder charges including cladding removal despite  being the majority owner of most of the flats.

No wonder board members and directors of housing associations are amongst the most highly paid people in the public sector - sorry 'charity sector'! 

Imagine being literally stuck living in a tower block in Newham with no escape as you are literally trapped in a worthless flat  but still have to pay monthly rent and service charges to the housing association - I feel desperate for them even if they do work in da media.

Edited by MARTINX9
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It's depressing. People who in the past would have had a reasonable house and life, reduced to 25% of a potential death trap in Newham, next to people who probably don't have to worry about paying for accommodation at all.

Bail them out. Everybody else gets a bailout - why not them?

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13 minutes ago, A17 said:

It's depressing. People who in the past would have had a reasonable house and life, reduced to 25% of a potential death trap in Newham, next to people who probably don't have to worry about paying for accommodation at all.

Bail them out. Everybody else gets a bailout - why not them?

Maybe another U-turn in the offing and yes a bailout. However there will just be more bailouts coming up if there isn't major reform and new legislation that accompanies any bailout.

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2 hours ago, A17 said:

It's depressing. People who in the past would have had a reasonable house and life, reduced to 25% of a potential death trap in Newham, next to people who probably don't have to worry about paying for accommodation at all.

Bail them out. Everybody else gets a bailout - why not them?

The is moral hazard. This is the Brown/Cameron/Carney put. Middle classes. Take on extraordinary amounts and forms of debt and financial responsibility. Said the govt. We've got your back they said. Look what happened after the credit crunch, they said.

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I feel your pain, and it's an awful position to be in. However, the government should not use one penny of public funds to help bail out leaseholders, landlords or freeholders.

In particular, council housing was sold off with the full understanding that the new owner took on liability for future work, to save that very cost from the public purse.

Homes were sold off cheaply, with that future liability in mind, and is one of the reasons that homelessness amongst the poor is so high.

Pay one person, then every rich landlord in the UK will put out their hands for the very same thing.

This is a private matter, entirely between the leaseholder and free holder, not a public funding issue.

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3 minutes ago, Blink said:

I feel your pain, and it's an awful position to be in. However, the government should not use one penny of public funds to help bail out leaseholders, landlords or freeholders.

In particular, council housing was sold off with the full understanding that the new owner took on liability for future work, to save that very cost from the public purse.

Homes were sold off cheaply, with that future liability in mind, and is one of the reasons that homelessness amongst the poor is so high.

Pay one person, then every rich landlord in the UK will put out their hands for the very same thing.

This is a private matter, entirely between the leaseholder and free holder, not a public funding issue.

Have you been living under a rock since 2007?

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4 minutes ago, Blink said:

I feel your pain, and it's an awful position to be in. However, the government should not use one penny of public funds to help bail out leaseholders, landlords or freeholders.

In particular, council housing was sold off with the full understanding that the new owner took on liability for future work, to save that very cost from the public purse.

Homes were sold off cheaply, with that future liability in mind, and is one of the reasons that homelessness amongst the poor is so high.

Pay one person, then every rich landlord in the UK will put out their hands for the very same thing.

This is a private matter, entirely between the leaseholder and free holder, not a public funding issue.

But you can bet it will become one. Bailout ahoy!

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9 hours ago, shlomo said:

a one-bedroom flat in east London... I’m a shared ownership tenant. I own a 40 per cent stake in my flat... my property is technically worthless

The cladding issue is a red herring here.

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1 hour ago, Blink said:

This is a private matter, entirely between the leaseholder and free holder, not a public funding issue.

Yes and no. The government is implementing new laws regarding the cladding.

I think they should issue guidelines (the cladding on this building is potentially flammable), but not require any action. Leave it up to owners and potential buyers whether they want to take the risk or not.

The BS regulations around [in the snarkiest possible voice you can imagine] "saving the environment", which led to this cladding, must also be dropped. Were the Grenfell dead worth a dozen polar bears? No.

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This is really unfortunate for those people - "caveat emptor" is one thing but this sort of thing is very hard to forsee, unless you bought the flat AFTER Grenfell.

I'm also surprised it costs as much as £78,000 to replace one flat's worth of the building cladding!  But then what do I know about building cladding...nothing.  That's the problem, nor does anyone.  Sometimes on HPC one can't help a bit of Schadenfreude but in this case I just feel sympathy - it could have happened to me when I bought a flat as a young person.

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1 minute ago, scottbeard said:

This is really unfortunate for those people - "caveat emptor" is one thing but this sort of thing is very hard to forsee, unless you bought the flat AFTER Grenfell.

I'm also surprised it costs as much as £78,000 to replace one flat's worth of the building cladding!  But then what do I know about building cladding...nothing.  That's the problem, nor does anyone.  Sometimes on HPC one can't help a bit of Schadenfreude but in this case I just feel sympathy - it could have happened to me when I bought a flat as a young person.

Yeah im almost with you, the problem is we all know who is going to pay for it all

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1 minute ago, Trump Invective said:

Yeah im almost with you, the problem is we all know who is going to pay for it all

This is the sort of thing I think the government SHOULD be subsidising.  Something that makes houses safer, and helps individuals who are unlucky rather than unwise.

It's virtually everything else that they spend money on I disagree with.

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2 minutes ago, scottbeard said:

This is the sort of thing I think the government SHOULD be subsidising.  Something that makes houses safer, and helps individuals who are unlucky rather than unwise.

It's virtually everything else that they spend money on I disagree with.

That's true - if it wasnt for all the other spaffing, this would be a non-issue

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6 minutes ago, scottbeard said:

This is the sort of thing I think the government SHOULD be subsidising.  Something that makes houses safer, and helps individuals who are unlucky rather than unwise.

It's virtually everything else that they spend money on I disagree with.

Reasonable argument. 

Also as much as i would love freeholders to be liable.. Typically, specifically and in bold part of the leaseholders agreement states not liable for repairs and maintenence and sold as is, which the leaseholder signed after receiving legal advice. 

At some point people need to read and consider what they are signing. 

Edited by captainb
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