In Manchester, Alison and Jon Everingham invested their pension in three off-plan flats at Connect House, the former Daily Express offices. Paying their £371,600 cladding bill would cost them their 14-year-old daughter’s chance to go to university, their plans to retire and their family home, says Alison, 55, a managing director. “We will probably be working for the next 20 years. We are devastated.”
To make matters worse, gas pipes were damaged during works to replace cladding — leaving residents without heating and hot water for three weeks, and landing the Everinghams with reduced rents and yet more costs to house their tenants elsewhere. “I can’t tell you the stress that all this has caused,” Alison says. Their case falls outside the new measures the government announced to protect flat owners from the huge costs of making their buildings safe.
They are not alone. Ajay Bhadresa, 41, a video editor, has a £204,000 bill to replace flammable insulation and timber walkways at Transport House in Salford, where he bought two buy-to-let flats to fund his pension. “The money we’re being asked to pay is more than I paid for one of my flats,” he says. “Unfortunately for me, I do own another property — the one where I live.” That means Bhadresa too is blocked from measures shielding fellow leaseholders.
Ros Morley invested in two small flats with state compensation for the death of her husband, Colin, in the London 7/7 bombings. Now she faces “vast bills” to fix fire risks in the façade of the Chocolate Box in Bournemouth, where she bought the one-bedroom flats five years ago. She is also excluded from any financial assistance. “This is totally unjust,” Morley says.
The story of fire risks that trapped at least three million people in unsafe or unsellable homes, exposed by Grenfell five years ago, has been one of life-changing financial and human costs for innocent homeowners. Investors who have ploughed their pensions into property are learning just how hard they have been hit. Diluted rules that allowed flammable materials on tall buildings since 2000 coincided with a boom in buy-to-let. In many city-centre blocks, small-scale landlords make up significant portions of leaseholders. Yet last month the housing secretary, Michael Gove, left hundreds of thousands of them out of changes to the landmark Building Safety Bill.
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The draft legislation exempts leaseholders with just one property — where they live or which “accidental landlords” were forced to let out — from all costs to replace cladding. It also caps repairs for other fire risks at £10,000 (£15,000 in London) for those with one or two UK properties, regardless of whether they live there or rent it out. The cap rises to £50,000 for flats worth more than £1 million, and £100,000 over £2 million. But landlords with more properties face unlimited costs.
Such landlords still have access to the government’s £5.1 billion funds to fix cladding on blocks taller than 18m. In buildings above 11m (five or more storeys), they would also benefit from clauses in the bill that put developers and cladding manufacturers first in line to pay to fix all defects. But if those companies cannot be found or forced to pay up, buy-to-let investors won’t have the same cap or cladding exemption. They fall off a cliff edge, with no statutory cover even for some of their flats.
The bill could also stop property investors from being able to sell. Any buyer would only get the cladding exemption and non-cladding cap if they purchase from an owner occupier, not from a landlord with a small portfolio. Then the lease will always stay “non-qualifying”.
Further government changes to the bill, expected on March 22, could extend the protections to owners of more properties, according to a source with knowledge of the matter. Lord Greenhalgh, the building safety minister, hinted last month in the House of Lords that the government did not intend to be “unduly unfair” towards “landlords with pretty narrow shoulders”.
On March 11 an inquiry by the housing select committee of MPs criticised Gove’s landlord exclusion. “Buy-to-let landlords are no more to blame than other leaseholders for historic building safety defects, and landing them with potentially unaffordable bills will only slow down or prevent works to make buildings safe,” its report says.
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Gove had told the MPs last month that the government was trying to avoid subsidising people who were of “significant means”. But he did not rule out protection for more landlords: “If there are specific hard cases or systemic problems that emerge, we will look sympathetically at any amendments.”
Mark Wittcomb, a retired firefighter, and his wife, Julia, an NHS nurse, used his pension to buy two small flats to support their “twilight years”, he wrote to the MPs’ inquiry. Both flats are in blocks above 11m with flammable cladding and other fire risks. The couple were “aghast” to discover that, as landlords, they won’t qualify for support. Like 70 per cent of landlords, the Wittcombs are basic rate taxpayers. “We are not wealthy property tycoons and can see no way of meeting the costs . . . we are desperately worried that we will lose everything we have ever worked for, including our home,” Wittcomb wrote.
However, people who own two UK properties plus homes abroad or other asset types are still protected under the bill. “Why are you suddenly worse off than a Russian oligarch with a penthouse?” says Ben Beadle, CEO of the National Residential Landlords Association. “It just lacks fairness . . . The government has announced that no leaseholder should pay a penny. If you have bought a property with the best intentions and all of a sudden you’re presented with this [the fire-safety defects], it doesn’t matter whether you’re a landlord or an occupier.”
The UK Cladding Action Group (UKCAG) says there is “no logical reasoning” for not giving such landlords the same protection as other leaseholders. Excluding them ensures blocks with significant portions of buy-to-let flats “will never be made safe”, it adds. At Northpoint in southeast London, where the university administrator Ritu Saha started UKCAG after flammable cladding put her life on hold, more than 60 per cent of flats are buy-to-let. Metis in Sheffield — where her co-founder Will Martin, a junior doctor, got a £100,000 cladding bill — is 90 per cent buy-to-let.
At the 18.5m-tall Victoria House in Leeds, which has fire risks other than cladding, only two of the leaseholders live in their flats. The rest are small investors who paid up to £135,000 for properties with a “guaranteed” return of 8 per cent that never materialised. “I don’t see how our building will ever raise the remediation funds if we don’t get the protection given to owner occupiers,” Elizabeth Avery says. She bought a one-bedroom flat off plan in 2018 as an income stream after her husband lost his job. Anne Plaskett purchased a £115,000 flat to fund her mother’s dementia care, while Brian Mountford, a retired priest, invested to boost his small church pension. The residents’ body told the select committee inquiry that one flat owner attempted suicide three times last year over the stress.
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Nigel Billen is on the board of the leaseholder company running the Pad in north London, where one of his five buy-to-let flats are located. Excluding landlords “creates a divide”, pitting small investors against residents, and will make it harder for flat owners to run their blocks, he told the MPs.
Mike Fox, an accountant, says he invested in three buy-to-let flats “because pension provision has been so decimated and missold”. All three blocks, in Basingstoke, Salford and south London, now have fire safety problems that could cost him £50,000 for cladding and another £50,000 to fix other risks. “It would ruin my retirement. I’m 60 now and I’d probably have to work until I’m 75.” Had he bought a faulty new car, the manufacturer would not refuse to take it back just because he had a second vehicle, he added. “I feel I’m being discriminated against — why am I being victimised and financially ruined?”
