Potential High Court battle for cladding leaseholders

Potential High Court battle for cladding leaseholders

LEASEHOLDERS IN the New Capital Quay development in Greenwich are preparing for a ‘potential’ High Court legal battle with developer Galliard Homes over fire safety issues.

In 2018 residents, whose flats were found to have ‘multiple’ fire safety issues, were concerned they would have to pay an estimated £20m to £40m bill, or £20,000 to £40,000 per flat, to resolve issues and remove combustible aluminium composite material (ACM) cladding. Developers Galliard Homes planned to sue the National House Building Council (NHBC) over payment, while one resident discovered her flat’s value had fallen from £475,000 to £50,000

It later transpired that government body Homes England ‘agreed to virtually wipe out’ her loan, while residents were also considering legal action against Galliard over combustible cladding replacement costsThen, local councillor Mehboob Khan called for the government to fund the removal of the cladding, while resident Nerisa Ahmed considered suing government agency Target HCA, which administers the help to buy scheme that she used to help buy her flat.

The NHBC then intervened last July to pay for removing and replacing combustible cladding, announcing removal plans for the 11 blocks in January. This will see all 2,000 residents of 992 flats – 334 of which are social housing – have ACM cladding replaced.

Inside Housing has reported on the legal case taken up by 58 leaseholders, who have launched a group claim over the fire safety issues against Galliard. They allege that ‘as a result of fire-safety defects’ including the ACM cladding, their flats ‘were not constructed in accordance with building regulations and are not fit for habitation’.

Leigh Day, the law firm acting for the leaseholders, sent a ‘letter before action’ to Galliard and landlord Roamquest - part of Galliard Homes - in May, with Galliard given a deadline of 18 June to ‘officially respond’, otherwise the claimants will go to the High Court. Galliard said that it will “robustly defend” any claim, though Leigh Day believes more claimants will join the action.

The law firm added that ‘losses caused by the fire safety defects are not covered’ by the NHBC policy, solicitor Chris Haan stating: ‘Although the NHBC has agreed to fund the replacement of the cladding, this will not cover the full cost to our clients. Property values have potentially been slashed, the landlord has yet to confirm whether substantial additional costs will be passed on to leaseholders, and residents continue to be distressed by disruptive remedial works and by the risk that they could be incinerated in their homes.’

While work has started to remove the cladding, the firm claims that one block – Admirals Tower – will ‘not be finished until August 2021’, with Mr Haan also pointing out that the government’s recent £200m fund for removing cladding from private blocks is ‘widely assessed as being insufficient to cover the cost of replacing cladding on all affected buildings in the UK, let alone other losses such as those suffered by our clients’.

He also noted that developers and landlords ‘should take responsibility for the full losses caused by defects in their buildings’, with Galliard responding in a statement: ‘Galliard Homes are aware of a claim having been made in connection with New Capital Quay. Galliard can confirm that the leaseholders have not been asked for one penny regarding any of the issues associated with cladding at New Capital Quay.

‘Galliard Homes has worked closely with the local authority, the NHBC and local residents at New Capital Quay in order to get issues on site resolved, and have also ensured that residents have been kept up to date on all remedial action being undertaken. To the extent that any claim is pursued Galliard Homes will robustly defend it.’