The cladding scandal is leaving properties unsaleable

    5 March 2020

    In the immediate aftermath of the Grenfell fire the left lost no opportunity to try to make out that it was a case of a Tory council subjecting the poor to substandard housing in order to save a few pennies. The more we learn, however, the more it becomes apparent that non-fireproof cladding is a scandal which afflicts hundreds of recently built or refurbished housing developments, from council tower blocks to posh riverside apartments. Many owners of such properties now face bills of many tens of thousands of pounds to replace cladding which — although it was passed by building inspectors at the time — is now considered to be lethal.

    Gleaming new apartments were the currency of London’s 20-year property boom — an investment which, it seemed, kept on giving. Yet the very thing which made them gleam — the cladding — is making properties unsaleable. In a recent debate in parliament, MP after MP spoke of miseries suffered by their constituents. Fleur Anderson, Putney MP, revealed that residents in two developments, the Swish Building and the Riverside Quarter, have been told by the freehold owners that they will have to pay between £50,000 and £80,000 each to replace the cladding on their blocks. This isn’t housing for the poor — flats at Riverside Quarter have been sold for between £750,000 and £2.15 million.

    Shabana Mahmood, MP for Birmingham Ladywood, spoke of the Islington Gates development in Birmingham’s Jewellery Quarter where leaseholders have been told they will have to pay between £40,000 and £50,000. The insurance premium for the block was recently hiked from £36,000 to £190,000. In the meantime, while buildings await new cladding, flat-owners have been sent huge bills for a ‘waking watch’ to make sure that if there is a fire, residents won’t be caught out while asleep on an upper storey. In one Leeds block each leaseholder must pay £670 a month for a security guard to sit up all night just in case.

    For many of those caught in such buildings there is no way out — the value of their properties has collapsed. In one case the owner of a flat at New Capital Quay, Greenwich, which they bought for £475,000 was told by a surveyor that it is now worth a mere £50,000. There are several flats in the development currently for sale at full price but according to the Land Registry only one has been sold in the past 12 months, for £396,000.

    Across England, 451 high-rise buildings have been identified as having aluminium composite (ACM) cladding — the sort of material used on Grenfell Tower. Of these, 155 are social housing and 200 residential blocks; the others a mixture of student accommodation, hotels and public buildings. ACM consists of two thin sheets of aluminium with a sandwich of flammable plastic material between them. It looks very similar to much safer solid aluminium cladding.

    The very thing which made gleaming new apartments gleam – the cladding – now makes them unsaleable

    Last May the government announced a £200 million fund to help the owners of flats fitted with ACM. The trouble is that the fund does not extend to a further 200 blocks which are believed to have been clad with High Pressure Laminate (HPL) — another material which has failed fire safety tests. In November a block of student flats in Bolton clad with HPL caught fire with similar results to Grenfell Tower — although fortunately without loss of life. Besides flammable cladding, some buildings, like Grenfell Tower, have been built with flammable insulation — not visible from the outside.

    That such buildings get built doesn’t say much about our supposedly rigorous building control system. We have building regulations which pettifog over all kinds of details — they specify, for example, that doorbells must be placed between 450 mm and 1,200 mm above ground level. Yet hundreds of pages of building regulations couldn’t prevent developers covering buildings with flammable material. On this issue the regulations merely state: ‘No guidance for European fire test performance is currently available, because there is no generally accepted test and classification procedure.’ The Building Research Establishment did manage to find such a test after Grenfell Tower, setting light to a nine-metre-high sample of wall.

    The scandal highlights fundamental problems with the leasehold system — the basis on which almost all flats in England and Wales are owned. In many cases the issue has descended into a slanging match between leaseholders and freeholders — the latter of which are often overseas-registered companies. Former communities secretary James Brokenshire demanded in November 2018 that freeholders sort out the problem at their own expense — although no effective action seems to have been taken.

    But above all, it is a reminder that there is no investment without its risks. ‘As safe as bricks and mortar’, property investors like to tell themselves. Safe as aluminium composite cladding doesn’t quite have the same ring.