Cladding complex residents could sue over value loss

Cladding complex residents could sue over value loss

ANOTHER COUPLE of residents of New Capital Quay, a Greenwich complex of blocks covered in flammable cladding, are considering suing a government agency after their flat lost value.

Earlier this year, the complex, found to have ‘multiple’ fire safety issues, saw residents concerned they would have to pay an estimated £20m to £40m bill, or around £20,000 to £40,000 per flat to resolve issues and remove cladding. Developers Galliard Homes planned to sue the National House Building Council (NHBC) over payment, while resident Cecile Langevin discovered her flat’s value had fallen from £475,000 to £50,000 as a result.

It later transpired that government body Homes England ‘agreed to virtually wipe out’ her loan, which ‘raises the prospect of multimillion-pound losses for the government scheme on any flat that goes into negative equity’. Residents of New Capital Quay are also considering legal action against Galliard Homes over combustible cladding replacement costs.

Most recently, local councillor Mehboob Khan called for the government to fund the removal of the complex’s ‘potentially lethal’ cladding, with this particular issue illuminated by original developer of Croydon site Citiscape – Barratt Homes – stepping in to fund cladding replacement after a tribunal had found against tenants, who might have had to pay £31,000 each.

The Guardian reported on another couple in the complex, Nerisa Ahmed and her husband, who have seen the value of their flat fall from £600,000 to £90,000, with their intention to sue Target HCA, the agency administering the help to buy scheme that the couple used to purchase the flat. The couple bought the flat under the scheme three years ago, with two purchase offers falling through in the last six months due to the cladding.

Mrs Ahmed commissioned Taylor Chartered Surveyors to undertake a survey report, in which the company stated that the ‘collapse in value’ was because the ‘cost of replacing the cladding was unknown’ as well as that ‘it was unclear when the cladding would be replaced due to ongoing legal discussion’ between Galliard and the NHBC. The surveyors also stated that some of the flats in the complex had been valued at nothing, as they were ‘unsellable, unrentable and unmortgageable’.

The couple are considering suing Target HCA as they claim it has ‘reneged on an agreement to write down the majority’ of the £120,000 help to buy loan that paid for 20% of the property. It had agreed that she could redeem the loan in April, agreeing to write off £102,000 due to the cladding, but on submitting the £18,000 remainder and expecting paperwork to follow, ‘this did not happen’, later discovering that the agency ‘had changed its mind because of the cladding’.

It was said to be ‘seeking guidance from the government’, and in response Mrs Ahmed – a lawyer – will sue if it ‘does not deliver on its contractual agreement’ to redeem the loan. Her letter before action saw her tell Target that she understood ‘it might be concerned with the fall in value of such properties’ but that it could ‘not change the rules after it had entered into a contract’.

Mrs Ahmed stated: ‘My flat is dangerous. I panic every night as I put my son to bed. I’m on the top floor – the 10th – and having a fire here is not something I’d like to experience. It’s very stressful. I’m not doing this for the mone. To change the rules and apply them retrospectively is an abuse of power. It is like buying a house and handing over the money and then the vendor doesn’t hand over the keys.

‘The government have done nothing about forcing private developers to remove the cladding and, instead of attacking the root of the problem, they are adding to the stress. We are people and it is not like we have any choice in this: we can’t move, we can’t rent, we can’t sell. We are trapped in a fire trap. It’s like having your freedom taken away. It is shocking that a government agency would act in such a cavalier manner. [It] is worrying and feels very wrong.’

In response, Target stated: ‘If a borrower’s property is affected by novel issues in relation to its valuation, eg its external cladding, Homes England reserves the right, in accordance with the terms of the equity mortgage, to agree the valuer used. This ensures the appropriate due diligence is carried out in the interests of borrowers and the taxpayer investment in these homes.’

Galliard declined to comment, while the NHBC said that ‘we understand that the situation at New Capital Quay is very concerning for residents. We have been in regular contact with the residents to keep them updated’. It also added that Galliard’s subsidiary managing the estate, PMML, ‘is legally responsible for the ongoing safety” and its house guarantee “does not absolve PMML of this duty’.