Property Gold is a monthly column written by independent bespoke property consultant, Alex Goldstein. With more than 17 years’ experience, Alex helps his clients to buy and sell residential property in some of the most desirable locations in Yorkshire and beyond. This month, Alex examines the effects of the flammable cladding scandal following the Grenfell Tower disaster.
Cladding isn’t just cladding. Following the tragic events at Grenfell in 2017, it has come to light that a high proportion of ‘modern’ apartment blocks across the UK were built and fitted with inadequate and flammable cladding, balconies, cavity barriers, insulation, fire breaks, plus some concrete frame structural defects… shall I go on?
The Government stepped in in February this year to pledge a £5 billion fund to help with costs, however this only scratches the surface, as the impact and fallout from the cladding scandal goes much wider than perhaps you think.
Figures vary, but current estimates suggest around 4.6m people are affected in an unknown number of buildings dotted around the UK. These owners are now effectively trapped in their own homes – they’re unsellable, un-mortgageable and insurance is questionable.
It is a dire situation for these property owners, who are mostly Leaseholders, with many facing bankruptcy as a result of escalating costs to rectify matters in their buildings. One owner reached out to me this week to say his flat was worth nothing and it cost the development where he lived £61,000 per week to have a waking watch (a patrol at night looking for fire breaches).
If Freeholders resolve matters themselves, they will undoubtedly pass these remedial costs on to the Leaseholders via a one-off charge or an escalated service charge. Afterwards and even if a building is signed-off as being safe, owners still face an uphill battle. Afterall, if you were a buyer and given the media frenzy surrounding the scandal, would you buy an apartment in one of these buildings? The market for modern apartments has been spooked and trust broken for the long term.
The implications go further still. The Government feels the banks can absorb the risk with those defaulting on their mortgages, however are we now diluting the issue by involving the banks? If they are saddled with bad debt… well we know what happened last time.
My concern is that we will be left with ghost towns and tower blocks, a fragmented society with crumbling local economies, large parts of the property market blocked with millions of owners losing out because they unwittingly chose to buy the wrong type of home. What about those wishing to pass their property (or tied up capital) on to their children, pension funds, investors – they all lose.
Whilst the Government have put forward a fund, why are we the taxpayer liable when it’s not of our making? The PLC Developers have a history of cutting corners and there’s no smoke without fire.
If you have any comments or questions for Alex, please feel free to contact him on [email protected]