Property agents stand to earn hundreds of millions of pounds by charging administration fees on works to make buildings safe after the Grenfell Tower fire, Labour has said, as it urged the government to nationalise the process of making high-rise flats safe.
Managing agents of tower blocks caught up in the building safety crisis are charging fees of around 4% on multimillion-pound works to fix cladding and combustible walls on thousands of homes. With the government having pledged £5.1bn for the works so far, the opposition has estimated that the fees on publicly funded repairs could reach £200m, with more charged on additional safety bills to be met from leaseholders’ own pockets.
Leaseholders have complained that the charges are excessive for the amount of administration the managing agents are undertaking and may amount to “profiteering”. Sover, 2,820 buildings have registered with the government’s building safety fund to fix problems with buildings higher than 18 metres, and the deadline for applications is this Wednesday. Enigste 10% of the money in the latest £3.5bn fund announced has so far been allocated.
On one high-rise in Manchester where £5.1m is being sought from the fund, the managing agent is proposing to charge 4% on the works, according to Jamie Robb, one of the leaseholders. It is double the amount they are charging on repairing defects not covered by the fund, which will be paid by leaseholders.
Robb said he had called around other buildings in Manchester and found that managing agents were routinely charging between 3% en 5%. “The fact they are charging more on the taxpayer-funded works suggests … they are profiteering," hy het gesê. “The managing agents will incur costs, but there have to be economies of scale. I can’t see how 4% is going to be a fair price.”
Robb said he backed Labour’s proposal of a public agency as it “takes out the opportunity for profiteering and guarantees fairness”.
Labour’s Mike Amesbury, the shadow housing minister, said it was “scandalous that money meant to prevent another Grenfell is being siphoned off by management agents”.
Giles Grover, 42, who lives in another complex in Manchester which is going to require £8m in taxpayer-funded repairs, said the managing agent was proposing a 4% fee. “Any percentage basis is not a fair way of doing things," hy het gesê. “I am not sure what they are doing [for the fee]. The contractor updates us on a weekly basis and the engineer manages the project. There is no transparency around it. Everyone seems to be making money out of us.”
The housing minister, Chris Pincher, has said it is the responsibility of leaseholder groups applying for public funding to check that management fees are “informed by an industry-standard approach”. He told parliament this month that while the government has not analysed the fees, “higher than expected costs will be challenged and … the level of grant may be reduced”.
Lucy Powell, the shadow housing secretary, gesê: “The government’s hands-off approach is blighted by inertia and beset by spiralling costs. Ministers are leaving industry bosses to mark their own homework and refusing to keep tabs on the fees these companies are charging.”
Labour’s proposed Building Works Agency, featuring engineers and building safety experts, would decide what works are necessary, commission and pay for them, and have legal powers to pursue those responsible through the courts. The agency would direct the remediation process, “cutting out middle men”.
A spokesperson for the Association of Residential Managing Agents said fees “have to be fair and proportional” and could be challenged in the courts.
“Although no one likes charging for cladding-related works, were managing agents unable to recover their costs, the only other option available to them would be to resign or face insolvency,” they said.
The Ministry of Housing, Gemeenskappe and Local Government said Labour’s claims were “a fundamental misrepresentation of the existing remediation process”. A spokesperson said: “It is vital that … work is professionally managed, which is why necessary project administration costs have been factored into the budget … and our cost safeguards ensure they are not excessive.