New build flats (only 4 years old), owners charged with £425,000 repairs, no insurance

mertywerty

Yep - that's what I mentioned in my first bullet point.

If you suspect that, you'd have to show that the s20 consultation wasn't done correctly. It's always more difficult to do that after the consultation is complete.

As mentioned previously, a tribunal is likely to ask why you didn't say something during the consultation. Rather than waiting until it's finished, and then expecting the freeholder to go through the whole process again.



Edit to add

And you need to be careful about getting the s20 consultation ruled invalid on a technicality - if it just means that it has to be done again, and the cost still comes out as £425k.

That might mean that the leaseholders are worse off, because they've had to pay for 2 consultations instead of just 1.

At the time the section 20 consultation (Feb 2020) started, the only costs half mentioned for the works was by the original surveyor reporting for CRL, where he said it was highly like the total cost of repair would be well within the £104k policy excess (which would be about £2k per flat), so that it wouldn't be worth claiming on the warranty anyway (this was in Dec 2020). 

The Section 20 was issued in Feb 2020, and in July 2020, a tender report had been completed with three quotes, the cheapest being £425k (the other 2 were closer to £500k). This is the first time the £425k was mentioned. 

As a result of the report and further discussion with the building consultants, the management company tried one more time to submit a claim with CRL, but it was refused in September which is why we have only started to act now. 

The £425k cost to repair is for essentially a totally new roof waterproofing system (WestWood), I'm not sure if this is the most expensive product out there, and how much value it is for money. 

Also I found out today that my CRL policy endorsement clause stating the roof was excluded from cover, does not appear for some of the other flat owners. I'm not sure why as the flats are all in one block. 

eddddy

So there's nothing there to suggest that the s20 was done improperly. But...

• You could hire your own surveyor, to see if they think the roof can be repaired in a different way that's cheaper

• And/or you can get quotes from more contractors to see if they'll quote less than £425k

Then if it looks like it can be fixed for less than £425k, you can see if you can get the section 20 consultation done again - you'd probably need to go to tribunal.

But if your surveyor can't see a cheaper way to do it, and/or you can't get cheaper quotes from other contractors - there's no point in increasing your costs by trying to get the section 20 consultation done again.

Crashy_Time

Scary but interesting thread!

[Deleted User]

Also a great illustration of why leasehold is a terrible idea and most countries just have freehold for apartments. The law badly needs to change.

user1977

[Deleted User] said:

Also a great illustration of why leasehold is a terrible idea and most countries just have freehold for apartments. The law badly needs to change.

While I don't disagree that leasehold is an absurd system for residential properties, freehold doesn't prevent buildings needing expensive communal repairs.

eddddy

[Deleted User] said:

Also a great illustration of why leasehold is a terrible idea and most countries just have freehold for apartments. The law badly needs to change.

As above, it's more an illustration of problems with:

• Developers who build shoddy, badly designed buildings
• Limitations in cover with newbuild warranties

The OP is faced with a bill of £8k.

It would no different if somebody bought a newbuild freehold house, and after 5 years found that the roof was leaking and needed £8k worth of repairs - and the newbuild warranty didn't cover it.


(In this case, there's also the question of why the OP's solicitor told the OP they were getting a 'better' Premier Guarantee Warranty which might have provided cover, but the OP ended up with a 'worse' CRL warranty which didn't provide cover.) 

mertywerty

eddddy said:

As above, it's more an illustration of problems with:

• Developers who build shoddy, badly designed buildings
• Limitations in cover with newbuild warranties

The OP is faced with a bill of £8k.

It would no different if somebody bought a newbuild freehold house, and after 5 years found that the roof was leaking and needed £8k worth of repairs - and the newbuild warranty didn't cover it.

(In this case, there's also the question of why the OP's solicitor told the OP they were getting a 'better' Premier Guarantee Warranty which might have provided cover, but the OP ended up with a 'worse' CRL warranty which didn't provide cover.) 

This is exactly sums up how and all the flat owners feel.

When someone purchases a newly built property it would be reasonable to expect that there are enough protections in place to ensure the building will not fail within 4 years (or if issues it can be fixed with no cost to the leaseholder), whether it's via lease obligations, or warranty, or insurance, or compliance/inspection/and sign off (building regulations). 

The fact that we have fallen through all the safety nets, for a building that is not even yet 5 years sold, and to be given no other alternatives but to each pay £8k for the repairs costs, is what is most alarming.

The secondary issue here is that of the cost of repairs, our expectations were managed by the CRL surveyors and the management company to expect the total cost of repairs to not be more than £100k. It wasn't until a few months ago, then they told us the quoted costs were actually going to be £425k - £500k. 

Finally regarding the solicitor and the Premier Guarantee that was briefly mentioned previously, whilst it should be disregarded for this thread, essentially what happened was these a lot of these flats were purchased off plan. The original agreement drawn up was that there was to be a Premier Guarantee in place as the point of exchange, but this did not happen and the solicitors did flag this up. Due to time pressures the sales team responsible for selling the flats advised to exchange with a commitment from the the developers committed to putting this in place after exchange. And as we found out, the developers didn't ever get the Premier Guarantee but put in place a CRL new build warranty. The CRL warranty is an accepted warranty from all mortgage lenders as far as I know, so this would still have been a problem even if not purchased off plan. 

eddddy

mertywerty said:

The original agreement drawn up was that there was to be a Premier Guarantee in place as the point of exchange, but this did not happen and the solicitors did flag this up. Due to time pressures the sales team responsible for selling the flats advised to exchange with a commitment from the the developers committed to putting this in place after exchange. 

What did the contract you signed and exchanged actually say about the warranty?

Did the contract say that you would get a Premier Guarantee? Or did it say something else?  Did you agree to the change of warranty provider?

mertywerty

In the end it was something like "Premier Guarantee or something comparable that is recognized by the Council of Mortgage Lenders". 

eddddy

mertywerty said:

In the end it was something like "Premier Guarantee or something comparable that is recognized by the Council of Mortgage Lenders". 

It might be worth looking again at that - if it really did say words like "something comparable".

If the Premier Guarantee would have covered the roof (maybe just in the first 2 years) but the CRL Guarantee didn't, they are not "comparable".


It may be that you had the option to back-out after exchange of contracts because of the change of guarantee provider (it depends what your contract said).

But if that's the case, your solicitor had given you a detailed report on the Premier Guarantee, why didn't your solicitor then give you a detailed report on the CRL guarantee to highlight that it was different?  So that you could decide whether you wanted to back-out.