And who will pay? In the world of “tenants” and “free owners”.
By Nick Corbishley, for WOLF STREET:
Imagine owning an apartment in a tall building that is suddenly considered a fire trap. Then you discover that you and all your neighbors will have to pay tens of thousands of pounds each to replace the flammable insulation and lining materials outside the building. You cannot sell the apartment because creditors refuse to take out a mortgage on the apartment. In closing, you have to pay hundreds of pounds a month in the midst of a global recession – in addition to the mortgage payment and other costs – to cover the costs of 24 hour fire patrols to ensure that the building you occupy does not. burst into flames suddenly.
This nightmare scenario is becoming increasingly common for apartment tenants in the UK. After the death of 72 people in the fire on 14 June 2017, in the 24-story Grenfell Tower in London that was equipped with highly flammable insulation and cladding, similar materials have been discovered in thousands of towers across the UK. Apartment owners in smaller buildings also had their lives destroyed because their blocks were built with unknown or dangerous materials.
So, first… “lease” agreements are still common in England, particularly with regard to apartment buildings with some common land and construction use. When an apartment is purchased as a lease, the buyer is really no more than a tenant, albeit with a lease that normally lasts up to a century. The “perfect property” – the building and the land – belongs to someone else, usually the developer or another entity to which the developer sold it, and they can extract the annual rent from those assets. Lease terms have become increasingly expensive as global investors have bought “properties”. The government was finally ashamed to at least promise to change this archaic system.
The new fire safety rules and regulations in buildings that took effect after the fire in Grenfell, while widely welcome, though decades later, have generated a number of unwanted consequences for the UK apartment market.
Mortgage lenders have refused to offer loans for any high-rise properties that have been flagged as fire traps or that have not yet been inspected, but which may be fire traps. As a result, the vast majority of the UK’s skyscrapers, which are at the bottom of the property’s staircase, are currently impossible to sell or buy.
This can end up causing serious problems at the top of the ladder, warns Eric Leenders, director of personal finance at UK Finance: “The entire property sales chain can collapse if part of that chain fails to get its shape: it’s not just the first-time buyers, second-place buyers, engines. We just don’t know the scale of the problem now. “
O Financial Times cited an estimate by the campaign group End Our Cladding Scandal that the erosion of confidence in building security had created 1.93 million “mortgage prisoners” in England. Last week, The Daily Telegraph, using data from the New Build database, suggested that up to 4.5 million buildings could be affected. Since then, the Royal Institution of Chartered Surveyors has submitted proposals aimed at reducing that number.
Most buildings have yet to be inspected, leaving millions of tenants trapped in financial limbo. Those whose buildings were once considered unsafe are having to pay hundreds of pounds a month, in the midst of a global economic crisis, to cover the additional costs of 24-hour fire patrol service on their buildings. For some, the costs are too high.
For those whose building has not been inspected, the wait is endless. The logistical chaos caused by intermittent blockages in the UK economy is not helping much. Neither was the acute shortage of trained inspectors: before Christmas, there were less than 300 fire safety professionals qualified to sign forms across the country.
In addition, nobody wants to bear the costs of inspection and, if necessary, of remediation of buildings. Total costs are expected to reach more than £ 15 billion to correct security problems in all affected buildings. But the government has so far promised only £ 1.6 billion. Tenants argue that homeowners and developers should bear the costs of making buildings safe. But for now, building owners can pass on the costs, which can reach £ 40,000 per apartment, to residents. And many are.
That could change in the coming months. In November, the House of Lords passed three amendments to the Fire Safety Bill, which included prohibiting tenants from being forced to pay. But these amendments will have to go through the return of the project to the House of Commons.
The Grenfell fire was completely preventable. And a positive change can eventually come from that. After two and a half years of hearing evidence, the Grenfell inquiry, still ongoing, identified three main reasons why the building was equipped with highly flammable materials:
1Serious negligence on the part of the Grenfell Building Control Council, Kensington and Chelsea Tenant Management Organization (KCTMO). The Grenfell survey provided unprecedented insight into how the UK construction industry puts profit above safety. Determined to cut costs in renovating the Grenfill Tower, the property’s owner, KCTMO, swapped the more expensive zinc plating panels for aluminum alternatives, in the process saving about £ 290,000 in costs. This became the main cause of the spread of the fire that claimed 72 lives.
two Handled security 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 that was installed in Grenfell. Arconic (from the USA) manufactured and sold the coating that surrounded it. In all three cases, commercial interests appear to have outweighed all other considerations, including security. Two of the companies, along with appliance maker Whirlpool, which produced the refrigerator that allegedly started the fire, were sued in the United States, but the class action was dismissed on the grounds that it would make more sense to try the case in the United Kingdom.
Research has shown that all three companies (Celotex, Kingspan and Arconic) have handled fire safety tests to obtain certification for their highly flammable products for use in tall buildings. Internal emails also revealed that employees at the three companies knew about the huge security risks posed by their products, but sold them nonetheless.
An example: in 2015, while Arconic’s Reynobond PE coating was being installed on the Grenfell facade, Claude Wherle, a former senior executive at the company wrote in an internal email that the material “is DANGEROUS on the facades, and everything must be transferred to FR [fire resistant] as a matter of urgency ”. He stressed that this opinion “is technical and anti-commercial, it seems”, adding a smiley face, in an email previously released by the survey.
Wherle is one of several Arconic employees who declined to appear as a witness in the investigation. Another, Claude Schmidt, who is president of an Arconic subsidiary, would have told the Survey team that he will only appear if he can choose the questions that will be asked.
3 – Widespread incompetence and apparent conflicts of interest in government and regulatory bodies, including the British Research Establishment, the British Standards Institute (BSI) and the British Board of Agrement (BBA), all privatized in the years before the fire. The Labor government also played an important role in paving the way for the Grenfell fire, having lifted the ban on fuel insulation for tall buildings in 2006. Even after the fire at Casa Lakanal in 2009 revealed the fatal consequences of flammable exterior panels , he refused to reverse course.
So far, the only people who have paid a high price for the fire – apart from the victims, their relatives and survivors, some of whom were still waiting for permanent relocation three years after the fire – are the millions of tenants who, through no fault, now are stuck in financial limbo. And many of them are trapped in dangerous buildings. By Nick Corbishley, for WOLF STREET.
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