Taxpayers face £4m bill as landlord refuses to make tower block safe

https://www.theguardian.com/society/2018/jan/18/council-set-to-take-on-tower-block-that-landlord-refuses-to-make-safe

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A landlord who is refusing to pay an estimated £4m bill to make safe a block of flats built with Grenfell-style cladding is likely to be bailed out by the taxpayer.

Robert Steinhouse, a London-based director of 91 companies, is the ultimate owner of the freehold of Nova House in Slough, a complex of 68 privately owned apartments which has flammable cladding and substandard internal fire safety.

His company has been charging around £250,000 a year in ground rent and service charges, leaseholders said, but is refusing to pay to make it safe.

Slough borough council is poised to take over the freehold and pay the costs itself. The deal could be completed by the end of the month.

“We simply do not believe the current freeholder has the capacity to do the work that is needed to safeguard the safety of residents,” said Mohammed Nazir, cabinet member for corporate finance and housing. “We will not put a price on our residents’ lives and their safety remains our priority.”

The building is likely to be handed over for a nominal price. Slough has had a £19m cut in its budget in the past three years and the cost of making Nova House safe would come from the capital budget, meaning cuts to other spending, officials made clear.

Last month leaseholders were billed £22,000 each for the re-cladding. But they argue that the freeholder rather than the leaseholders should pay. That position has been endorsed by the secretary of state for housing, Sajid Javid, but on Thursday Labour criticised the government for failing to enforce it.

Richard Venables, who brought one of the flats upon completion in 2015, said as well as fire safety there have been problems with hot water, heating and lifts.

“The owners of the company that owns the freehold should pay for this,” he said.

It is one of several disputes now raging around the country where at least 78 privately owned apartment blocks have been found to be clad in similar flammable panels to those which spread the fatal fire at Grenfell tower.

Leaseholders at the Citiscape complex in Croydon have been handed bills of up to £31,000 each to replace the dangerous cladding, which the owner – ultimately the family trust of yacht-owning property mogul Vincent Tchenguiz – is refusing to pay.

In response, Javid said “it is for the responsible person to take the necessary steps to ensure the safety of residents”. The “responsible person” is usually the landlord, according to the Residential Landlords Association.

The Association of Residential Managing Agents (Arma) said a similar situation is faced by leaseholders in high-rise blocks nationwide and bills of “tens of thousands of pounds per leaseholder” are likely.

“The government has suggested that landlords should pay for the works but there is no suggestion that anyone has acted inappropriately or cut corners, rather that building control approved and signed off the various types of cladding at the time and have only now tested those very systems and found them unsuitable,” said Nigel Glen, the Arma chief executive.

The shadow housing secretary, John Healey, on Thursday branded the government response to tackling the problem in the private sector “slow and insubstantial”. Some freeholders have lodged cases with the property tribunal to seek court backing for their belief that contracts show leaseholders should pay for remedial works. Leaseholders are resisting.

Steinhouse’s company, Ground Rent Estates 5 Ltd, estimates the cost of re-cladding at £1m, with a further £500,000 for fixing sub-standard fire compartmentalisation inside the building which means that fire would spread faster than it should. Sources at the council suggested the total could be as high as £4m. Ground Rent Estates has made an insurance claim on behalf of the leaseholders to cover the cost but said in a statement that if that fails “[leaseholders] will be liable for the costs”.

Ground Rent Estates 5 Ltd bought the freehold in 2016 after the works were completed a year earlier.

“We have made numerous enquiries with all parties, but it is still not clear where the issue arose in the construction of the property,” a spokeswoman said.

A spokesperson for the Ministry of Housing, Communities and Local Government said: “We are clear we want to see private sector landlords follow the lead of the social sector and not pass on the costs of essential cladding replacement to leaseholders. We are keeping the situation under review.”