‘The stress is immense’ - Landlord lumped with £46k debt over cladding saga
- Credit: Ross Bonner/ Charlotte Bond
A landlord is in eye-watering debt as the fallout of the cladding scandal has trebled his service charges and caused his insurance premiums to skyrocket.
Ross Bonner, 33, owns the leasehold of four flats in St Francis Tower, in Ipswich town centre, which is currently encased in “suffocating” shrink-wrap after safety defects were uncovered following the Grenfell tragedy.
But the Kent-born investor claims he faces financial ruin if “ludicrous” sums continue to be asked of him by the building’s freeholder and managing agents at the block.
His research shows that flat owners are even being charged by their management company to answer questions about the charges.
St Francis Tower was the first high-rise in the country to receive a portion of the government's £5bn Building Safety Fund, which covers the costs of cladding remediation work.
But while the fund reduced the costs for St Francis leaseholders by nearly 80pc, they still face bills of £9k per flat for a waking watch, cladding replacement and the installation of automatic-opening vents and sprinklers.
These expenses have now made their way into leaseholders' service charges, which the landlord says are becoming unbearably expensive.
In 2015, Mr Bonner’s service charge was £350 for six months, or £1,400 for his four flats.
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But last year he was asked to pay a trebled sum of £4,284 in half-yearly service charge demands – and is now in arrears of more than £46k to the freeholder and managing agent for the costs of the cladding project and outstanding service charges.
“Being in so much debt really takes its toll”, the 33-year-old said. “The stress of keeping up with all of this is immense.”
But the block's management company BMUK said fees had increased because of the large amount of extra work it had to do in response to the cladding crisis.
Although the housing secretary said developers and not leaseholders should foot the bill for cladding replacement, it remains unclear whether buy-to-let landlords are to benefit from the scheme.
Last year, Mr Bonner paid a total of £7,000 to the tower block’s landlord, RG Securities, and its managing agent, BMUK, which he claims was the "absolute maximum” he could afford.
But on top of that, he also paid £1,000 to Pier Management, who procures building insurance on behalf of the landlord and charges admin fees.
Mr Bonner then had to pay a further £200 in ground rent.
The government has now asked the Financial Conduct Authority to investigate “crippling” insurance costs for leaseholders, but Pier’s insurance accounts show just how much St Francis Tower's premiums have ballooned in the last few years, with 2021 seeing leaseholders hit with a collective bill of £29,000 – up £5,000 from 2017.
"Even though I paid over £8,000 last year to the manging agents and freeholder, I still get payment reminders and have been hit with big late payment charges”, Mr Bonner said. “It’s ludicrous.”
Neither Pier Management nor the freeholder responded to requests for comment, but BMUK said this was a "legal obligation" and that the agent was simply "doing its job by following up on unpaid debts".
Accounts for BMUK meanwhile show an increase in management fees being demanded of leaseholders at St Francis Tower since the cladding crisis took hold.
The management fees jumped to nearly £30,000 when BMUK took over in 2016, and to more than £50,000 in 2018. They are currently reaching £51,000.
BMUK said the figure was reflective of the professionalism and experience it had in managing complex buildings such as St Francis, and the greater day-to-day management required by the cladding crisis. It said it expected the figure to decrease when cladding work was completed.
'We're being charged to ask questions'
Mr Bonner asked BMUK for all invoices for 2020 to be sent to him to see what leaseholders' management fees are spent on. He received them last month.
One invoice, dated September 2020, shows that BMUK charged leaseholders £432 plus VAT for admin time spent explaining the Building Safety Fund to flat owners, and answering their questions about the charges.
This was separate to the £50,000 management fee. BMUK said the alternative was for tenants to "navigate this process themselves" and believed the charge was reasonable.
Their spokesman added: "Our role as the management company is to manage and maintain the building for tenants and leaseholders.
"We have no equitable interest in the property and are paid an agreed fee for our services.
"We anticipate they will be adjusted down when cladding works are complete."
But Mr Bonner said he "despaired" when he saw the invoice, adding: "I had no idea we were being billed for asking questions about these sums."
What about the tenants?
Mr Bonner said the cladding works had blocked out his tenants' access to natural light or fresh air, and hoped the scaffolding would be taken down by the end of the year.
But one tenant, who moved to the block in July 2020, said the pace of works had been slow since the shrink-wrap went up in May 2021.
Caroline Haydon-Knowell, 53, said: “I only ever see one or two workers out there once a fortnight. Nothing ever seems to happen. We’re given no information.
“I moved into this flat because of the view. You used to be able to see all the way out across the Orwell Bridge to Felixstowe. The sunrises and sunsets were gorgeous.
“Now we don’t even know what the weather is like. The plants I’ve had for ten years are dying off."
BMUK's spokesman said: "The works are progressing as quickly as the circumstances allow, while allotting for the usual setbacks with a project of this size.
"We expect it will be complete by the end of 2022, but will know about when the wrap will be removed in the coming months.
"We are hugely sympathetic to the situation leaseholders find themselves in. If the conversion by the original developer had been done correctly, no-one would be in this situation.
"But we must ensure the building is brought up to standard as soon as possible, and this must be paid for."
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