Luxury flats sold for up to £900,000 have been branded worthless and might be demolished after so many faults were discovered they could be uninsurable.
Residents of the new build block in Camden, north London fear they may be trapped in properties valued at £0 and deemed 'unmortgageable' due to the amount of defects.
The flats sold for between £700,000 and £900,000, are now valued at £0, the owners said.
Within months of the first leaseholder moving in four years ago, the roof began leaking into the communal stairwell and terraces started letting in water, causing water damage to flats.
Interior and exterior walls of the flats have since started to crack, while some windows and doors no longer open and close properly.
Despite years of reports about the building cracking, bending and leaking, the insurance company that provided the 10-year warranty has not paid out.
Now a government minister has asked Camden Council to consider whether it can prosecute the construction firm for "recklessly" signing off on the block of flats that has been judged 'not fit for purpose'.
An expert surveyor has deemed the building potentially unstable and said consideration should be given to demolition.
Leaseholders said they have forked out more than £300,000 in legal fees over their damaged homes and live in “constant fear” of total financial ruin.
Camden Council said it is urgently exploring enforcement options after the government asked it to consider legal action.
Software engineer Daniel Bruce, 38, sold his successful tech start-up to a bank and put down a 75 per cent deposit on an £850,000 apartment in the building in Agar Grove.
Daniel Bruce, 38, said: “For years we’ve been trying but the help isn’t there. We are the victims. We were sold catastrophically damaged homes. But nobody has got our back.
“I feel physically repulsed by my computer - because that’s the tool I have to use to fight. I’ve had to become an activist. Fighting this has become a full-time job.
“I don’t consider myself an emotional person, but I’m absolutely distraught.
“Somebody should have done something by now. New build buyers need to know that their sign-off certificate doesn’t mean anything and their warranty might be impossible to claim against.”
His master bedroom is now closed off due to a terrible smell in the ensuite - believed to be rot caused by a leak somewhere in the bathroom.
Parts of his ceiling have come down and there are cracks throughout the apartment, while some windows no longer open fully.
He added: “I don’t remember the last time I slept for more than two hours. It’s frozen our lives.”
Jewellery designer Alexandra Druzhinin, 49, who paid £900,000 for her apartment, is also beset by problems.
She said: “We constantly live in fear. We are completely trapped. We can’t get away from this.
“I’m just absolutely drained. Not only have we lost the money we spent buying and renovating the flat, and the legal fees – but now we stand a chance of losing everything we own because we can’t get insurance.”
Downstairs neighbour Adam Helal, 58, paid £705,000 for his flat that has significant cracking in his terrace wall.
His leaking bathroom has damaged his internal walls and part of his ceiling has also come down.
Mr Helal said: “All the windows are faulty. I work in sound and there’s no sound-proofing at all.
“It’s supposed to be triple-glazed but there’s actually not much difference if you have them open or shut.”
Problems became apparent less than a year after the first leaseholders moved in and in 2020 a major leak was discovered in the communal stairwell.
As a result, developer Prime Metro commissioned an expert survey, which found evidence of movement in the building.
A survey two years later by a different expert questioned the suitability of the foundations and found the building was unfit for purpose and potentially unstable and suggested demolition as a solution.
Prime Metro Properties based in Islington, north London, said it was limited in what it could say about the block, not wanting to "prejudice any future proceedings”.
A spokesman said the firm retained three of the block’s seven flats, as it “continues to suffer the consequences of the problems which have manifested themselves”.
He added: “Since the building began to display problems we have spent a considerable amount of our own money and time investigating, trying to get to the root of these problems, and have taken matters up with various insurers and the warranty providers, at no expense to the other lessees, and continue to do so.
“We remain committed to having this matter resolved and have kept all the lessees appraised of the issues, as well as our efforts.”
Michael Gove, Secretary of State at DLUHC, has offered the leaseholders a meeting.
His department has now released a letter, sent to Camden Council leader Georgia Gould on May 3 by Mr Gove’s under-secretary Lee Rowley.
Mr Rowley wrote: "Departmental officials have asked your building control team to consider whether there is sufficient evidence to prosecute Salus under section 57 of the Building Act 1984, for knowingly or recklessly signing off the building.”
A conviction under Section 57 carries a maximum sentence of two years in prison or an unlimited fine.
But the leaseholders have warned others who buy new build properties that they have “no meaningful protection” legally or from insurance companies.
Acasta European Insurance Company Ltd said it was "the insurer for certain warranty and latent defect policies" at the block.
A spokesman added: "Acasta is fully engaged with and is discussing concerns raised regarding the property with all interested parties.
"We take these concerns very seriously and are committed to fulfilling any obligations under the relevant insurance policies."
The Department for Levelling Up, Housing and Communities (DLUHC) said: "The situation faced by the innocent residents of Agar Grove is deplorable and we are applying pressure to those involved to reach a just solution.
"The minister for building safety has written to Acasta to make it clear to them we consider their behaviour unreasonable and we expect them to produce a plan to resolve the issue promptly."
Since Margaret Thatcher privatised building control in 1985, homes no longer have to be signed off by local authorities and instead, developers can choose private firms to do it.
Prime Metro Properties chose Salus Approved Inspectors to catty out this work.
Salus, whose head office is Hinckley, Leicestershire, operates nationally, employs more than 70 people and boasts a diamond certificate for customer satisfaction.
According to Companies House, its six directors shared a total of £620,636 in 2022, in pay and dividends.
Salus said it had not seen the surveyor reports, “despite requests from various parties that we are sent a copy to allow us to investigate”.
Director Stuart Power said: “Whilst we have heard second-hand that there are some issues, we are not privy to the specifics of the issues to allow us to comment fairly.
“However, we have been and are willing to review the reports, visit the site, engage with the owners or their representatives and investigate and make comments accordingly, once we have the relevant information to allow meaningful discussion and comment.
“I’m grateful for how far they are looking into it,” buyer Daniel Bruce said of the authorities.
“But even if Salus are proven to have acted recklessly, there’s no accountability to us.
“That’s a real problem. Everywhere we’ve turned, there’s been nothing available to make us whole.
“The law makes it our responsibility to try to make things whole, at great financial and emotional cost to ourselves – and all we did was buy homes.
“In my opinion, DHLUC should extricate us from the situation and then make it the developer and warranty provider’s problem, rather than our problem, as it has been for the last four years.
“In the long-term, they need to enforce a law that forces those responsible to make buyers whole.”
Camden Council said it was exploring what legal action could be taken to help the leaseholders.
A spokesman for the authority added: “Following changes made by central government, private building inspectors can sign off on new developments without approval from local authority building control.
“This unfortunately creates situations like this as we have no powers over the decisions made by private inspectors.
“We want to do all we can to support the leaseholders at Agar Grove and we are urgently exploring what enforcement options are available to us.”
