Walking Watch Fire Safety Charges?

by Readers Question

10:41 AM, 6th May 2020
About 6 months ago

Walking Watch Fire Safety Charges?

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Walking Watch Fire Safety Charges?

I’ve received several additional service charge demands for a walking watch where there is, as yet, uncertainty as to the fire safety compliance of the blocks in which I have flats. These are already running into the hundreds of pounds per apartment.

I feel really frustrated about it as it appears the whole charges are passed on to the leaseholders and the landlords (like Charlton, Aviva and Adriatic) appear to be contributing nothing. Are others in the same boat with these types of charges?

I would have thought regarding safety, that the landlord needs to take their responsibilities seriously and step up to the plate with regards to costs. I let out the apartments I own and I wouldn’t expect my tenants to pay to replace faulty equipment, fire alarms etc, that would be down to me as their landlord.

As a leaseholder I would expect the same of my landlord when it comes to the fabric of the building wouldn’t you?

I’d be interested to know if you’ve anyone has any comments or advice.

Thanks

Edward


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Comments

Ian Narbeth

10:17 AM, 7th May 2020
About 6 months ago

Hi Edward
Whilst I sympathise with your predicament, it is to be expected that the freeholder/landlord will not bear these additional costs. This is because the landlord's interest in the property is worth much less than the tenants'.Suppose each tenant pays a ground rent of £250 pa. The freeholder's interest is worth perhaps 12 to 15 times that in a good market, say £3000 to £3750. With the Government threatening to cap ground rents or ground rent increases, the value of that income stream may go down. It is unlikely to go up, unless the ground rent is indexed in some way and indexation is under threat. So the freehold reversion may have the same cash value in 10 years' time as today. The leaseholders, on the other hand will have their flats which may increase in value.
In those circumstances it would be commercially foolish to volunteer to meet a financial obligation that the lease says falls upon the tenants. I am afraid you are between a rock and a hard place. The building's insurers probably insist on the walking watch as a condition of cover. Alternatively they may increase the premiums substantially if a watch is not provided and of course the risk to occupiers would go up. The landlord would be criticised and possibly prosecuted if a Grenfell type fire occurred and the watch had been stood down.
I appreciate this seems harsh but the public debate is not helped by talk of "landlords" stepping up to the plate and putting their hands in their own pockets. The Press and politicians are happy to lazily lump landlords together as if we were all rich heartless bastards and they do not distinguish between the Peter Rachmann-types and cases such as yours where the value of the tenants' interests in the building may be 50 to 100 times that of the landlord's interest.

SimonD

11:14 AM, 7th May 2020
About 6 months ago

In response to Ian's comment above, this highlights why freeholder landlords should not be embedded in peoples homes at all. Nowhere except England and Wales use such a system for flats. Most places use Commonhold type systems - flat owners collectively own the building, no ground rents, no permission fees or lease extension costs payable, no declining lease. Freeholders are happy to get these fees and yet do not want to pay for remediation. In other words the average leaseholder gets no benefit from paying these fees to a remote entity, and is in effect paying a private tax.
I have some sympathy with his view that freeholders usually have a very small financial interest in the building compared to the leaseholders, yet they are classed as the building owner and have excessive legal powers compared to the leaseholders who have the majority financial stake. Landlords with such a small financial interest cannot expect the building to be remediated for them by the tax payer, however innocent leaseholders deserve such protection. The best thing would be for the landlord to leave the building, the freehold to pass to the leaseholders, and the cost to be paid for by those responsible - the original developer, their insurers and the government (weak building regulations and oversight). The freehold / leasehold system as used in England and Wales complicates matters, with the government expecting freeholders to pay - freeholders naturally want to pass the cost on to leaseholders via the lease because the system allows it.

BernieW

14:14 PM, 7th May 2020
About 6 months ago

Edward - There are two points which come to mind having read about your situation. Firstly, you have entered a contract with the freeholder/landlord - namely the lease. As with any contract, it sets out who is responsible for what, who pays for what, et cetera. So the first thing to do is "Read The Bl00dy Lease" to see if the landlord can charge you for the waking watch and/or the remedial works - and if he/she/they can, then have you been charge correctly, have that charge been made in the correct legal way, and is that charge "reasonable" within Landlord & Tenant law. If not - apply to the First-tier Tribunal (Property Chamber) for a determination on what you should pay, if anything.

Secondly, the government has pledged £1bn ... yes, one billion pounds ... to assist landlords and leaseholders like you. You're in an unfortunate situation, through no fault of your own (both landlord and leaseholder) and financial help is available to get you out of that situation. I suggest you work positively with your landlord rather than blaming them for a problem they did not create.

Lastly, in response to SimonD - the situation described here has a freeholder/landlord who is trying to sort out the unsafe situation the leaseholders and residents find themselves in. The freeholder will make no profit or financial gain from making the building safe - they will do what they've got to do because it's the right thing to do. Had the building been owned under commonhold - that professional outside influence would not be there. Under commonhold the residents / unit-holders would have to fend for themselves. Now, would they act professionally and pro-actively to solve their problems - or would they moan groan and blame others?

Leasehold and freehold landlords are not the problem here. And commonhold is not the cure all answer to such situations (although it may well be an improvement, if updated and enhanced).

Sebastian O'Kelly

15:03 PM, 7th May 2020
About 6 months ago

Sebastian O'Kelly, LKP, writes:

Freeholders are not organising waking watch "because it's the right thing to do", but because they have a legal obligation to keep a building safe. Or face prosecution.

The freeholder / his manager will be making a profit out of organising the waking watch, as there will be a management fee. There will also be a profit involved in cladding remediation. There will be some work involved in organising both contracts (quite a lot, in cases of the latter).

The freeholder will almost certainly be making a profit from the insurance of the building, and leaseholders will be paying - but without being a contracted party they will be unable to know what this commission involves. Freeholders' insurance often applies across the portfolio. Insurance commissions and complaints over claims, which freeholders routinely do not pursue if it conflicts with wider commercial interests, are routine. Leaseholders pay for insurance and should be a contracted party.

The waking watch was always intended to be an interim measure lasting a few months, but replaced with upgraded alarm systems. That's according to Roy Wilsher, Chair of the National Fire Chiefs Council (NFCC). https://www.leaseholdknowledge.com/getting-cayman-islands-freeholders-to-help-with-cladding-crisis-is-an-additional-difficulty-says-uks-top-fire-chief/

It is unlikely that the larger freehold owners of these assets are maintaining the waking watch for commercial gain. More because it is a compliance belt and braces, and, besides, the leaseholders are paying, not them.

The familiar rubbish about commonhold need not detain us. Any commonhold association (or RMC or RTM in England and Wales) will soon find decisions taken out of their hands for non-compliance in today's regime of fire safety. This has happened in Australia with strata associations, and it almost certainly should happen at Islington Gates in Birmingham, an RMC, which has a huge service charge shortfall and is poised to become uninsurable. Without outside assistance, it will need to be evacuated. https://www.leaseholdknowledge.com/appeal-to-robert-jenrick-islington-gates-faces-evacuation-if-cladding-bills-not-paid-on-april-1/

Government ministers wasted two years urging freeholders to "do the decent thing" and pay to remediate "their" buildings. This was in part because they believed the lobbying propaganda of the ground rent lobby that professional investors in freeholds were the "responsible long term custodians" of buildings.

LKP has long been critical of residential freeholders, and the unbalanced powers that they have, but did indicate that they were only the speculators in residential buildings' freeholds and should not pay for cladding remediation and associated costs: https://www.leaseholdknowledge.com/why-should-will-astor-tchenguiz-etc-be-paying-to-remove-grenfell-cladding/

Of course, this is a bad way of organising communal living in flats, with wide potential for abuse. The rest of the world uses forms of commonhold, but it must be understood that this involves greater responsibility as well as freedom from a minority shareholder, with an array of privileges under the law in any money dispute. The windfall of lease forfeiture being the most egregious.

DALE ROBERTS

17:53 PM, 7th May 2020
About 6 months ago

We are leaseholders who bought off plan into a new development 10 years ago. All the legal requirements regarding a new build, and the supporting 10 year cover by the NHBC including detailed fire safety cover commensurate to a new build, satisfied us that we were buying our units from a reputable builder. Notwithstanding these assurances and the fact that the development was as far removed from the cost cutting example of the Council owned and refurbished Grenfell, our development has suffered the same fate any new build has that is covered in cladding. Selling and re-mortgaging became impossible. The cladding was extensively tested by the developer/owner with no conclusive results however the local fire department insisted on a waking watch 24/7. The developer/owner/landlord also initiated extra fire precautions at their cost and this has been ongoing since the Grenfell tragedy. As far as we are concerned this is how it should be. We bought into a development on the premise that it was a state of the art development with secure insurance cover. The cost of these units was substantial and contributed to the success the developer/landlord enjoys - the company is listed on the stock exchange.
We should not have to ensure the development is fit for purpose at our cost. It must be to the cost of the developer/landlord. And the NHBC should also shoulder responsibility if not the UK government for permitting a highly contagious substance to be utilised in the construct industry. These are matters outside our area of expertise or responsibility. We are the innocent investors caught up in an insidious scandal not of our making.
Fortunately for us the developer/landlord is in agreement.
The company is financing all costs to remove and replace the cladding and continues to finance the night watch. The day watch was stood down after the local fire department inspected and approved the extra fire precautions ie more sprinklers and fire alarms.
Although the government has set aside funds for the replacement of cladding it does carry the caveat that these funds must be recouped from the leaseholder which in itself is already self defeating. In fact unacceptable.
We are offshore BTL investors. It has been a nightmare. Brexit, cladding, toxic leaseholds, rogue tenants and prejudicial landlord legislation have us determined to exit this market.
The fact that the developer/landlord is financing the requirements to make the units viable to mortgage lenders has been an enormous relief.
And possibly the only positive in an investment endeavor that we have grown to hate.

blair

22:44 PM, 7th May 2020
About 6 months ago

I note some of the comments many not really helpful but agree the landlord is not a money bank and your lease will no doubt say lessees must pay for repairs but not major improvements that are not statute required.

All that as it may. this constant comparison to Grenfell by some landlords and local authority building management departments is not right. Firstly read not Fire risk assessment report. If you feel it is too knee jerk request another by a independent Firs Risk company - not the councils' own officers. Things to review and are very relevant to determining the risk are things like: how tall is the building. Is there two means of escape ( exc.the lift) is there a fire alarm system, is there a fire detection system. Are the escape routes fairly simple. Then there are many types of panels and then was there smoke stops installed All the above are relevant. Grenfall was a result of poor senior management/supervision of the juniors making decisions and daily management.

I own a flat where Westminster are the landlords. - every year they are doing a full/new fire assessment ( at a lot of cost too) and always they find some "new" serious fire risk that needs doing. Yet it is only a 5 story building with a well ventilated easy escape route plus recently fitted smoke detectors/emergency lighting/fire alarms.
Read the Fire Risk Assessment and review esp. make sure they have fully determined the type of panel and how it was installed. ( I am assuming it has exterior cladding) plus a review of how good are escape routes and fire detection systems.

At Grenfell so many mistakes ,bad management have shown up Plus the exterior cladding was merely for improvements to the insulation and appearance.

DALE ROBERTS

9:48 AM, 8th May 2020
About 6 months ago

Reply to the comment left by blair at 07/05/2020 - 22:44Your response trying to excuse the Grenfell tragedy on "bad management" is at the very least disingenuous if not based on ignorance.
Grenfell is the standard that the UK government has used as a benchmark to initiate the knee jerk legislation now mandatory for all developments irrespective of inbuilt modern fire safety precautions. They have also conveniently sidestepped responsibility for allowing cheap cladding to be a legal build construct in the UK - and this accusation could also be levelled at the NHBC. It is quite clear no testing was ever done on cladding to ascertain it's fire hazard potential.
The investigations into why Grenfell became the raging inferno it did has exposed numerous cost cutting measures by both the local Council and the builders contracted to "refurbish" the building not the least of them being NO sprinklers. Further, it highlighted the implausibility of insisting that residents remain in their units as a protective measure. This law has now been reversed as you are aware.
The local Council erred in placing costs above lives. Cheaper cladding and sub standard fire precautions.
It is a shame that the punitive regulations that pertain to private landlords do not apply to Councils.
And it is now private leaseholders who are paying the cost of bad Grenfell decision making.
ALL accommodation must meet stringent fire and construct imperatives.
ALL accommodation must meet stringent "fit for purpose" habitation rules..
It is unfortunate that social housing is excluded from the above.


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