Cladding disgrace must be resolved as insurance premiums soar

Homeowners must be helped out of the cladding crisis according to a leading property firm. Apropos, a UK-wide letting firm, believes that the continuing slow response from government to the plight of hundreds of thousands of homeowners unwittingly trapped in their homes with dangerous cladding must be resolved this year.

Individuals trapped by potential cladding issues following the Grenfell Tower disaster are finding that insurance premiums are soaring with some people quoting increases of more than 1,000% to cover properties that were only recently sold to them as safe and secure homes yet are now unsaleable liabilities. One Birmingham block has seen their annual insurance premium increase from £40,000 to £500,000 adding over £2,500 a year to every apartment owner.

With the added insurance prices, often with the additional cost of funding 24-hour fire patrols which the Ministry of Housing, Communities and Local Government (MHCLG) estimate can cost between £12,000 and £45,000 per week depending on the number of individuals and the hours covered, and the inability to sell their homes many owners are despairing of seeing any way out of their dilemma.

The original government investigation was to look at buildings with similar cladding to Grenfell Tower and initiate repairs. However, the government has continued to expand the remit of the investigation and last January enormously extended the remit of the safety inspections to include all buildings over 11 metres (although this is not part of the formal inspection process lenders have started to ask for an ESW1 fire certificate following this change) with a combustible cladding system. The result is that it is now estimated that there are at least 839,000 leasehold flats and 58,000 apartment blocks with potentially unsafe cladding.

Following the Grenfell Tower tragedy there were only a few thousand properties requiring inspection to obtain the fire safety certificate known as an EWS1 form, so the pool of a few hundred qualified assessors who could sign off properties should have been able to check homes and sign them off as safe in a relatively short period of time. Now with nearly one million homes deemed to be at risk the required inspections will take years leaving thousands of people trapped in their homes paying enormous fees in insurance and fire patrol costs.

A £1bn Building Safety Fund was announced last year by Chancellor Rishi Sunak and this is being used to repair Grenfell-style cladding issues, but criticisms have arisen that it is not applicable to all fire-related repair issues.

David Alexander, joint Chief Executive Officer of apropos, commented:

“The situation these homeowners find themselves in is completely unacceptable. With enormous insurance premiums and the cost of fire patrols many of these individuals, who bought their homes in good faith a relatively short time ago, are now facing open ended bills, with a property they are unable to sell, and complete uncertainty about when their nightmare will end.

“The extension of the remit of the investigation by the MHCLG sounds like a positive move but has ended up asking more questions than it answers without enough suitably trained personnel to adequately resolve this issue. The problems related to Grenfell should have been resolved first and then, where necessary, extend the investigation to look at other claddings and other building heights. By lumping everything together the Government have enormously delayed resolving this issue for a much larger number of people who cannot be expected to foot these bills and live with this situation for a prolonged period of time. They need this to be resolved.”

Last September, a scathing report by the parliamentary housing committee said that:

“Progress has been unacceptably slow.” The report continued: “The Department (MHCLG) has missed its target badly for Grenfell-style cladding to be removed from all high-rise blocks by June 2020, other than in a few exceptional cases. The Department’s new target is for works on the remaining high-rise blocks to be completed by the end of 2021. It is imperative that the new deadline be met.”

The report continued:

“Most residents in blocks with dangerous cladding face exorbitant costs of funding interim safety measures (such as ‘waking watches’) while waiting for the cladding to be removed. Leaseholders have been trapped in this situation, unable to sell their flats which are worth nothing. This accentuates the urgent need for the replacement of dangerous cladding to be accelerated.”

The report concluded:

“A lack of skills, capacity, and access to insurance is hampering efforts to improve or simply assure the structural safety of apartment blocks, and thereby to restore the confidence of buyers and mortgage lenders in sales of flats across the country. Leaseholders are in limbo and facing huge bills because of a system-wide failure to protect purchasers.”

David concluded:

“The government may well argue that resolving the cladding issue has been hampered by the pandemic, but it is clear there were serious issues with this system prior to March 2019. The government needs to support residents facing escalating insurance premiums, and fire patrol costs at the same time ensuring that inspections can be carried out rapidly to reassure lenders so that these individuals can get their lives back. At the moment everyone in a property with suspect cladding is living in limbo with little hope of resolution. They cannot be ignored fearing for their lives while their finances are being steadily eroded.”

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