Leaseholders in building sheathed in flammable Grenfell cladding sent a £2m bill for repairs


#1

Originally published at: https://boingboing.net/2018/01/18/freeholder-freeloaders.html


#2

The perfect definition of insult to injury.


#3

The whole “Leasehold” thing is bizarre to American ears… And I come from a state where some property has “ground rents,” where you own the building, but rent the land it sits on.


#4

And you thought your HOA or condo board was bad.


#5

Cory kind of mangled the explanation, to be honest - Leasehold is essentially the same as Ground Rents. Leasehold home ownership is not that common outside of London and a few other large cities, except under a few circumstances, such as houses build on Church of England-owned land or land belonging to Oxford University. In London, they often relate back to aristocratic estates. Nowhere is the maxim ‘all property is theft’ better illustrated, since all such land holdings by the nobility were predated and made possible by the expropriation of all English land by William the Conqueror.

There are plenty of controversies around the renewal of leaseholds and the affordability of doing so, partly because of the curves used to calculate their value (‘graphs of relativity’) being the subject of some dispute at the moment. I’m not sure of the exact details.
http://www.graphsofrelativity.co.uk/


#6

#7

Re the Tchenguiz brothers, lots of litigation here:

http://www.bailii.org/cgi-bin/lucy_search_1.cgi?querytitle=Tchenguiz&mask_path=uk%2Fcases+scot%2Fcases+ew%2Fcases+ie%2Fcases+nie%2Fcases+eu%2Fcases

The legally-minded may enjoy…


#8

As I understand it the difference between ground rents and leaseholds is that in theory anyway, leaseholds have an expiration date, while ground rents do not. So the disputes with leaseholds had to do with what exactly happens when the lease expires.

edited to add. ISTR that until relatively recently, at the end of the lease, the default was that the property reverted to the landowner, unless some other arrangement could be agreed upon. But now the lease is automatically renewed, and the leaseholder(s) has the legal right to purchase the property.


#9

Expanding on that, in those cases the sale of the freehold would either be prohibited (e.g. by church or university bylaws) or prohibitively costly (e.g. due to outsized penalties). They’re incentivised to hold onto the freehold or are sometimes stuck with it. The aristocratic London freeholders have no such excuses, and indeed some of them sell out to their modern equivalents, the oligarchs and bankers.


#10

What’s the Luke Skywalker quote? “Amazing. Every word in that sentence was wrong”? :slight_smile:

Not quite but nearly. :slight_smile:

Leasehold properties are very common all over the UK. Nearly all flats are leasehold. What is less common is leasehold houses.

Aristocracy or otherwise has essentially sod-all to do with it these days, although yes, not surprisingly a lot of property in the UK is still owned by aristocrats or the Church. Hardly surprising given as you say, they nicked it all.

Leasehold renewal is fairly straightforward as it happens and not that expensive unless you let the term run down too far. Once you get under 80 years left, it gets very expensive because you start having to factor in something for the possibility that the landlord might get the property back and be able to flog it off again.

The most recent kerfuffle about leaseholds I know of was about rising ground rents. for years, the UK had got by quite happily with paying a nice big premium for the lease at the start and low ground rent during the term, often even nominal sums like “one peppercorn”. Where there was an actual ground rent it was often something set back in 1950 at £100 per annum which increased by £50 every 50 years or so. Not exactly taxing.

Then clever buggers hit on the idea of selling of leasehold flats and houses with ground rents that would increase according to a formula that means that by the end of the term the ground rent would be something like £10,000 per year.


#11

At some level, if the landlord made the decision to clad the building in an unsafe material, couldn’t the leaseholders sue him?


#12

Well, leaseholders can in fact usually take over the management themselves and even if the freeholder is allowed to manage, they can only charge what the lease allows them to and their decisions, the costs, etc. can be challenged by the leaseholders.

As you said - there is significant regulation.

This particular case is however a shining example of the risks of leasehold property, especially in those ginormous flat complexes.

You don’t own it. You don’t control it. You have to contribute.

And the costs in the ginormous flat complexes are correspondingly ginormous.

Most people just look at the premium and try and ensure the service charge is as low as possible. Whereas what you should be looking for is whether maintenance is done regularly and properly and whether the lease provides for the build-up of a fund to cover large expenses or not. Many don’t which means that when something like this comes along or the roof needs replacing the tenants have to suddenly find large sums of money.

So it goes I’m afraid. Property is expensive.

In this case, it’s especially bad that it’s the non-fire safe cladding but it could just as easily be the replacement of the lifts or repainting.


#13

Maybe.

Got £30,000 or so? That’s what it’ll probably cost to get a better answer.

The landlord could probably sue the developer for the cost of repairs though.


#14

The cladding was put onto existing buildings wasn’t it? I would presume the type of cladding was put in at the request or approved by the landlord.


#15

It was in Grenfell. I don’t know about this one. The complex looks quite new so the cladding may have been installed from the outset.

Either way, whether it’s against the developer or the building contractor/supplier, the landlord would appear to have a cause of action since I doubt they asked for “especially flammable cladding, please”.

The leaseholders might have a cause of action (certainly would if the landlord did ask for non-compliant cladding).

I expect we’ll find out a lot more once the case has been heard.


#16

Not in that wording, for example in Grenfell they wanted what was the cheapest. Which happened to be highly flammable.


#17

Yes, but the contract will still require that it also meet the necessary standards.

Which Grenfell’s appears not to have done.

It’s always a tricky one for builders and developers. Just because someone says they want it cheap does not mean you have carte blanche to sell them something shoddy.

Sometimes you have to suck it up and say “What you need can’t be done for the money you’re prepared to pay”.


#18

Every time i think about what happened to those people at Grenfell it just upsets me to no end. People shouldn’t have to die to take something seriously.


#19

Councils and registered social landlords across the country have largely agreed to cover the costs of emergency works to replace cladding on scores of affected buildings. But this dispute is one of the first to affect private blocks

Capitalism is simple. Privatize profits. Nationalize costs. Fuck over the peasants as much as you can get away with, and then some. Be sure to endorse and benefit law and order so you don’t wake up dead one morning.


#20

You never know…