And who is going to pay? In the world of ‘contractors’ and ‘freeholders’.
By Nick Corbishley, for WOLF STREET:
Imagine that you own an apartment in a high-rise building that is suddenly considered a fire pit. You then discover that you and all your neighbors will have to pay tens of thousands of pounds each to replace the flammable insulation and cladding material on the outside of the building. You can not sell the apartment because lenders refuse to write a mortgage on the apartment. To limit this, you are told to pay hundreds of pounds a month, amid a global recession – in addition to mortgage payments and other costs – to cover the cost of fire patrols 24 hours a day. to make sure that the building you live in does not suddenly go up in flames.
This nightmare scenario is becoming increasingly common for tenants of apartments in the UK. After the deaths of 72 people during the fire on 14 June 2017 in the 24-storey Grenfell Tower in London, which was fitted with highly flammable insulation and cladding, similar materials were uncovered at thousands of towers across the UK. Owners of apartments in smaller buildings also had their lives improved because their blocks were built with unknown or dangerous materials.
Firstly … ‘lease’ arrangements are still common in England, especially with regard to apartment buildings with common land and buildings. When an apartment is bought as a lease, the buyer is actually no more than a tenant, even if it is one with a lease that usually lasts up to a century. The freehold – the building and the land – belongs to someone else, usually the developer or another entity to which the developer sold it, and they can fetch annual rent on the assets. The terms of the leases became increasingly difficult as world investors bought up the “freehold”. The government is ultimately ashamed to at least promise to change this archaic system.
The new safety rules and regulations for new buildings that came into effect after the Grenfell fire, although admittedly decades too late, have caused a number of unintended consequences for the UK housing market.
Mortgage lenders have refused to offer loans for properties in high-rise buildings that are marked as firebreaks or that have not yet been inspected, but which may turn out to be firebreaks. As a result, the vast majority of UK high-rise apartments, which sit at the bottom of the real estate ladder, are currently impossible to sell or buy.
This can cause serious problems in the end, warns Eric Leenders, managing director of personal finance at UK Finance: ‘The whole chain of property sales could collapse if one part of the chain could not get its shape: it’s not just first time buyers, this is the second step, these are movers. We just do not know the scope of the case right now. ”
The Financial Times cites an estimate by the campaign group End Our Cladding Scandal that the erosion of confidence in building security has resulted in 1.93 million “mortgage prisoners” in England. Last week, The Daily Telegraph, using data from the New Build database, suggested that as many as 4.5 million buildings could be affected. Since then, the Royal Institution of Chartered Surveyors has submitted proposals to reduce the number.
Most of the buildings have yet to be inspected, keeping millions of contractors trapped in financial distress. Those whose buildings are already considered unsafe will have to pay hundreds of pounds a month amid a global economic crisis to cover the additional service costs of 24-hour fire patrols at their buildings. For some, the cost is too much to bear.
For those whose building has not been inspected, the wait is endless. The logistical chaos caused by disruptions to the British economy is hardly helping matters. The acute shortage of trained inspectors is also not: before Christmas, there were less than 300 professionals in the field of security to sign the forms across the country.
In addition, no one wants to cover the cost of inspections and, if necessary, the repair of the buildings. The total cost is expected to be £ 15 billion to rectify the security issues in all the buildings involved. But the government has so far pledged only £ 1.6 billion. Tenants argue that freeholders and developers should bear the cost of making buildings safe. But currently building owners can pass on the cost, which can amount to up to £ 40,000 per apartment, to residents. And many are.
This may change in the coming months. In November, the House of Lords passed three amendments to the fire safety bill, which include forcing tenants to pay. But the amendments will have to pass the return of the bill to the House of Commons.
The Grenfell fire was completely avoidable. And there can be positive change in the end. After two and a half years of hearing evidence, the ongoing Grenfell investigation has identified three main reasons why the building is equipped with highly flammable materials:
1.Gross negligence by Grenfell’s Building Control Board, the Kensington and Chelsea Tenant Management Organization (KCTMO). The Grenfell Inquiry provided unprecedented insight into how the British construction industry puts profit above safety. The landlord, KCTMO, was determined to cut back on the renovation of the Grenfill tower, switching to more expensive zinc cladding panels for the aluminum alternatives, saving about £ 290,000 in costs. It became the main cause of the spread of the fire that claimed 72 lives.
2. Manipulated safety tests and fraudulent product claims by the three manufacturers, Celotex, Kingspan and Arconic. Celotex (from France) and Kingspan (from Ireland) manufactured and sold the insulation applied to Grenfell. Arconic (from the USA) manufactured and sold the upholstery wrapped around it. In all three cases, commercial interests appear to have surpassed all other considerations, including safety. Two of the companies, along with appliance maker Whirlpool, which manufactured the refrigerator that allegedly started the fire, have been sued in the U.S., but the class action lawsuit was dismissed because it would make more sense. to hear the case in the United Kingdom. .
All three companies (Celotex, Kingspan and Arconic) showed that the investigation manipulated the fire safety tests to get their highly flammable products certified for use in tall buildings. Internal emails also revealed that employees at all three companies knew about the major security risks their products pose, but sold them anyway.
One example: in 2015, when Arconic’s Reynobond PE coating was applied to the facade of Grenfell, Claude Wherle, a former senior executive at the company, wrote in an internal email that the material was’ DANGEROUS on facades is and that everything must be transferred to FR. [fire resistant] urgent “. He noted that this opinion was “apparently technical and anti-commercial, and adds a smile,” in an email released earlier in the day.
Where is one of a number of Arconic workers who refuse to appear as witnesses to the investigation? Another, Claude Schmidt, who is a president of an Arconic subsidiary, allegedly told the investigation team that he would only appear if he could choose the questions he would be asked.
3. Widespread incompetence and apparent conflicts of interest in government and standard bodies, including the British Research Establishment, the British Standards Institute (BSI) and the British Board of Agrement (BBA), all of which were privatized in the years preceding the fire. The Labor government also played a major role in paving the way for the Grenfell fire, after lifting a ban on flammable insulation for high rises in 2006. Even after the fire in Lakanal House in 2009 revealed the fatal consequences of flammable exterior panels, he refused to reverse gear.
So far, the only people who have paid a heavy price for the fire – apart from the victims, their relatives and the survivors, some of whom waited three years after the fire for permanent residence – are the millions of tenants who, through no fault of theirs, own, is now trapped in financial limbo. And many of them are trapped in buildings that are dangerous. By Nick Corbishley, for WOLF STREET.
There’s an unprecedented space across the West End: REIT Shaftesbury PLC is grappling with a new reality. Read … As short-term tenants and immigration fizzle, and people move to ‘work from somewhere else’, vacancies in London skyrocket, rents fall
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