When a retired school teacher purchased two flats in a brand new development in Liverpool in 2015, he thought he would be making an investment that would support him in later life.
Almost seven years on, Nazir Musa has had to cut his retirement short and is now working at a printing business to help generate income.
After making an investment worth £120,000 drawn from his life savings, he now battles to stay on top of soaring service charge payments and hopes he will not have to front an astronomical bill for cladding remediation costs which has rendered his properties almost unsellable - unless for an enormous loss.
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He told the ECHO : “This is a lifetime's earnings. My money is hard earned. The money I've put in there as an investment for later life, it's totally and utterly wrong [how I’ve ended up in this situation].”
Mr Musa, 59, is one of many thousands of leaseholders across the region who’ve seen their health and dreams crushed by the costs of being ‘trapped’ in unsafe and unsellable homes.
Nearly five years on from the Grenfell disaster which claimed 72 lives, leaseholders are still battling to rectify fire safety failings in their developments.
It’s a situation that’s threatened leaseholders with six figure sums to pay for cladding remediation costs and fit new fire safety features, while insurance premiums and service charges have soared.
For those like Mr Musa, it’s seen the value of their investment dramatically plummet while the price has rocketed for maintaining properties he’s never owned a set of keys for.
Mr Musa told the ECHO: “I knew nothing about leaseholding. I just thought I was buying a couple of flats. I thought it was done and dusted and I’d get my rental income every quarter.”
Mr Musa explains that following Grenfell, the cladding was replaced on the building where he is a leaseholder, The Studio on Parliament Street, part of the The Quarter development - a joint venture between Knight Knox and X1 lettings.
However, following the Building Safety Bill, the development must under-go further remediation totalling £6.1m, Mr Musa claims.
It’s a cost that, until recently, would have been fronted by the building’s leaseholders if it were not for the establishment of the Building Safety Fund - a billion pound pot set up by the government to provide grants for management companies and leaseholders.
The fund was extended in early January to cover buildings under the height of 18 metres and is looking to recoup a further £4bn from the construction industry.
But while Mr Musa’s building qualifies for funding - he says the finance department managing the building is "optimistic" their application will be successful - he claims it is still only in the first step of its application and there is no guarantee for success - all the while higher service costs are already landing in the post.
He told the ECHO: “Everything I pay in there is dead money. Ultimately I don't own the flats. The bricks and mortar isn't mine. I've just got the right to rent them out and get some rental income from it. I thought I was buying the flats.”
Mr Musa explains how his service charges have nearly doubled over the course of three years, from £1250 to £1600 to £2363 a year.
When approached by the ECHO to ask what was driving the increased costs, Haymarket Management said this was due to utilities not being part of the charges in previous years and that a full re-tender of the building services has been carried out to ensure costs are as low as possible.
Mr Musa claims he has to pay an upfront cost of £5000 each year on top of £2000 to the letting agency, X1 Lettings, who rent out the flat on his behalf.
Should the Safety Fund application be unsuccessful, he would have to pay £54,000 towards cladding remediation costs.
He said he purchased the leasehold on the flats for £60,000 each in 2015, but following Grenfell and the overhanging remediation costs, their value has been reduced to “peanuts” and he would have to face selling at a huge loss.
He told the ECHO: “I thought I need to get out, I don't like this. So I put them in the auction for £40,000, £20,000 lower than I paid.
“Not a single bid.
“There's vultures out there. I've had investors zooming in offering peanuts. They need to be regulated.”
Speaking to a letting agent in Liverpool, he was advised to “get shut” of the properties but in some cases the best he could hope for was “£25,000”, in some case some were being sold for as little as “£10,000”.
It’s a situation that has forced Mr Musa to return to employment as the cost of the two flats has had the opposite effect of his initial plans.
He told the ECHO: “I'm a retired school teacher ordinarily, but I'm having to go back to work now.
“As soon as the building grant is done, I'll just sell them and get rid.”
Asked how much of a loss he is willing to take on his investment, Mr Musa pointed to the need to protect his health.
He replied: “What price do you put on your health, your mind, your ability to sleep at night? At this age you haven't got the time. You haven't got the time to wait around.
“The system needs regulating in terms of ground rents and service charges, and there's nothing there in place at the moment to stop it from happening.
“There's nothing that overrides this or oversees this.”
Julie Fraser is the founder of Liverpool Cladiators campaign group which is fighting for justice on the behalf of leaseholders in the city region.
She said that many leaseholders find themselves in a situation where they are being “exploited” as a result of the rising costs of their apartments.
Ms Fraser told the ECHO: “We have seen people apply to the Building Safety Fund and by the time they've got the money through or an agreement that things will be paid for, their bills have increased by 30%.
“It's a dreadful situation. So many people are left saying that they cannot move on with their lives, they cannot sell the apartments unless they have a cash buyer.
“With rising insurance costs, unless the Government or Financial Conduct Authority take swift action against insurance companies, we are never going to see that money again.
“But it's all coming a bit too late. People have already gone bankrupt and lost everything.”
Ms Fraser, a leaseholder herself, has found herself in a similar situation to Mr Musa after using her life savings to invest in a flat at The Decks residential complex in Runcorn.
Speaking to the ECHO recently, she explained how the value of the flats in the complex was at one point as low as 1p while insurance costs for the building have climbed from £33,000 in 2019 to its current rate of £514,000 - with service charges trebling to £750 per quarter.
However, observing Mr Musa’s situation, she believes current Housing Secretary Michael Gove is on the right track to finding a solution and believes leaseholders need to “hang on” rather than sell their properties for huge losses.
Ms Fraser told the ECHO: “Best advice I'd give to anyone right now would be to hang fire, see how it pans out and if the developers will go in and do the work. If not, legislation will be brought in. But we just don't know when at the moment.
“Michael Gove needs to take swift action now. As it stands, nothing is written out saying we're going to get these costs back for leaseholders.”
Riverside Labour MP, Kim Johnson, where Mr Musa’s apartments are located, has offered her support to leaseholders and also raised the issue in Parliament, but believes more needs to be done to go beyond promises to pay for solely cladding remediation costs.
Ms Johnson MP, told the ECHO: “While payments from the Building Safety Fund are coming through, thankfully, at last, there is still a huge delay on approvals.
“Furthermore, the BSF will only pay for removal and replacement of flammable cladding - but leaseholders are failing a fire risk assessment due to lack of compartmentalisation, unsuitable insulation and wooden balconies.
“None of these are covered by the funding, leaving innocent leaseholders still with bills running into tens of thousands of pounds.
“This is on top of the costs for the waking watch and new fire alarms together with eye-watering increases in building insurance: in some cases leaseholders are facing insurance premium rises of over 400%.
“For buildings that are worth much less than they were bought for - if anything - due to the lack of an EWS1 certificate. This is money leaseholders didn't budget for, shouldn't be expected to pay, and for which there will be no reimbursement.
“I have had so many constituents contact me suffering from real fear and distress from living in unsafe buildings compounded by the fear of the cost of remediation pushing them into bankruptcy.
“Leaseholders do not deserve to live with this hanging over them any longer.
“Four years after the tragedy of Grenfell, it is time the Government stepped up and covered the full costs to ensure people are safe in their homes.
“I will be supporting the McPartland-Smith amendment to the Fire Safety Bill which promises just this.”
Responding to whether the Government will be taking action to regulate rising insurance and service charge costs, a spokesperson for the department of levelling up, housing and communities outlined that Michael Gove wrote to the Financial Conduct Authority (FCA) and Competition and Markets Authority (CMA) on January 28 to call for a review into building insurance premiums for people living in medium and high rise blocks of flats.
You can read the full letter here.
