The leasehold residents of a Croydon housing block must pay almost £500,000 to have potentially hazardous cladding removed, a London tribunal has ruled.
The ruling is a defeat for residents who claimed that the bill was not “reasonable” – not because it is too high, but because it is too low.
The case is one of many disputes in the wake of the Grenfell Tower fire, and is one of the first to reach judgment.
The case, which still can be appealed, was between FirstPort Property Services, the managers of 95-appartment complex Citiscape in Croydon, and the building’s leaseholders.
FirstPort was seeking approval to charge the estimated costs of £483,000 to the residents in their service charge. In a ruling on March 9, tribunal judge Angus Andrew of the First Tier Tribunal Property Chamber agreed that they could.
Cladding cost considerations
According to the judgment, following the fire at Grenfell, FirstPort employed watchers to patrol the property to raise the alarm in case of fire, and began to investigate the cost of changing the cladding.
The company’s surveyor estimated the cost of replacement to be £483,000. However, an external surveyor estimated the cost to be far higher: between £1.8m and £2.1m.
“The tenants’ case was that the estimated cost of £483,000 cannot be reasonable because it is too low,” the tribunal judge wrote in his ruling.
“This is the first occasion that any of us can recall on which a lessee of group of lessees have come before us to object to an estimated or actual cost on the grounds that it is too low,” he wrote.
READ MORE: What price safety after Grenfell?
The surveyor “did not act unreasonably” when came up with his estimate, the tribunal judge said. “Furthermore, the tenants have not been prejudiced by the low estimate.”
He said that he was told at the hearing that if the £483,000 is paid, the company would have sufficient funds to remove the cladding and safeguard the underlying structure with covered scaffolding. That would allow the company to dispense with the fire patrol, which is also being paid for via the service charge.
He said that “it is foreseeable” that the tenants may have claims against various other parties, such as the cladding manufacturers, the builders or the local authority. However “the difficulty with all these potential claims is that they are entirely speculative, with uncertain outcomes”.
More disputes expected
Jon Rowling, head of property consultancy TFT’s dilapidations department, said that there are likely to be many such disputes, and they will probably have “many moving parts”.
Considerations will likely include “the terms of the lease/service charge provisions; the particular specification of cladding/insulation combination; the extent of other influencing factors, such as sprinklers etc”, he said.
In addition, the possibility of claims against third parties is also a consideration, as is the result of the upcoming public inquiry, he said.
“A contractual obligation (presumably on the part of the landlord) to keep the premises in good ‘condition’ (as opposed to good ‘repair’) might be relevant,” he said.
Even so, “if the landlord is obliged to carry out the works, the tenants will, normally, be obliged to fund it”, he said.
