Lawyer warns of 'years of misery' for leaseholders

A specialist solicitor has warned that “years of misery” lie ahead for leaseholders affected by the cladding scandal.

Mark Chick, head of the landlord and tenant team at Bishop & Sewell, said despite the government’s £3.5 billion support package to help support leaseholders left with increased service charges bills and unable to sell or remortgage their flats in the wake of the Grenfell tragedy, the cash won’t help everyone.

He said that as the financial support is not means tested, poorer leaseholders in low-rise blocks will mis out, “while affluent owners of high-rise properties would be eligible”. 

Chick said the cladding fund, announced by Robert Jenrick on 10 February, falls far short of what is required to address the fire safety defects in the UK property sector. 

He commented: “While the direction of the government’s intervention is to be welcomed, there are some notable gaps in the policy, not least the fact that leaseholders living in low-rise buildings (below 18 metres) will have to pay for the removal of unsafe cladding themselves.”

“Leaseholders in smaller blocks face years of misery”, he added, “and are likely to need to take out long-term loans to pay for remediation works to remove unsafe cladding that was fitted by developers and construction firms.”

He said leaseholders urgently need more clarity on “how these loans will work in practice, including how they will be repaid and over what timeframe, and what will happen to the debt in the event that they sell the property”.

Chick also expressed concerned that the policy is focused only on the removal of cladding from high-rise blocks, and fails to address other fire safety defects, such as inflammable materials used in the internal structure of the building, or the cost of installing additional fire-retardant materials. 

He said it is unclear what if any help will eventually come from the government and what form it will take for leaseholders, pointing out that The Building Safety Bill has not yet been passed. 

“It seems rather perverse that defective construction practices will likely be paid for by leaseholders, probably through increases in service charges”, he added. “It is likely that leaseholders who are eligible for Government support will need to show evidence that the cost of remediation works cannot be covered by a claim brought against the developer before they can apply for funding. 

“Meanwhile, leaseholders who are not eligible for support should also explore whether they can bring a claim for breach of warranty.” 

There are also potential ramifications for freeholders. Chick said service charges could rise to cover the cost of remediation works.