A landlord faces financial ruin due to having to pay her share of building insurance costs that have soared from £34,000 to more than £500,000 a year amid the cladding scandal.
Grandmother Julie Fraser, 59, bought the investment property – a two-bedroom flat in Cheshire – in 2016 with her life savings for £76,000 as part of her pension plans.
Five years on she faces a cladding repair bill that almost matches the price of the flat at £73,000.
It is not the eyewatering repairs bill that is the biggest financial worry for Mrs Fraser.
The most urgent financial concern is actually the spiraling quarterly service cost on her property, which also includes building insurance.
Julie Fraser has seen the buildings insurance at her block of flats rise from £33,892 in 2019 to £514,000 in 2022
It is now impossible to afford the skyrocketing quarterly property service fee, which covers the costs of building insurance and site maintenance.
The buildings insurance has soared due to the property’s cladding issues, up from £33,892 in 2019 to £514,000 in 2022.
It is even though there are new fire alarms installed.
It has led to the service charges that she pays rising from £254 a quarter in 2019 to £719 a quarter in 2022.
The investment property, located in the development with 288 homes is five minutes walk from the home of Mrs Fraser.
In 2016, Mrs Fraser purchased her 2-bed apartment.
Although she leases the property, the tenant is responsible for payment of the service fee. She cannot afford the service charge.
She said: ‘I can’t afford to pay the £719 and face being in breach of the lease if I am unable to pay it.
“I felt that I did the right thing in investing in my flat. Since then, my condition has made it impossible for me to work. I have relied on savings to get by the last two years. These savings have all dried up.
“The apartment does not have a mortgage because I purchased it using my savings and life to pay my pension. These costs are a concern for many others in the same circumstance.
After Michael Gove, Secretary of State for Levelling Up, Housing and Communities, had written to the Financial Conduct Authority, requesting that it review the building insurance market for multi-occupancy residential properties.
The letter stated that building insurance premiums had risen dramatically for nearly all tenants in flat blocks.
The company responded by saying that insurance premiums were only one of many rising costs facing residential leaseholders following the Grenfell tragedy. However, they want products to provide fair value, premiums accurately and fairly reflect the risk.
“We’re asking companies to think about what they can do to assist leaseholders.
After the 2017 Grenfell Tower fire, concerns over cladding have been a nationwide issue
Mrs Fraser welcomed Gove’s recent intervention on cladding repair bills, in which he announced that leaseholders living in blocks under 18m would not have to pay their cladding repair bills.
She added: “I believe Michael Gove is trying to make a difference.” He listens and is so far doing the things he stated he would.
“I hope next year is more positive and our insurance premiums will fall closer to their current levels.” Realistically, it would be good to get them down to £50,000.’
