Apartment owners in Manchester fear losing their homes with soaring insurance costs

• Video report by ITV Granada Reports Correspondent Elaine Willcox

Jo Davies was thrilled to get on the property ladder and bought a flat in the Baguley area of Manchester.

After living there for three years they decided to sell and found a buyer for the flat for £147,000 in 2020.

But that's when the trouble began. Jo said the buyer pulled out when the Grenfell Fire scandal exposed fire and safety defects in thousands more tower blocks.

The apartment block at Compass Point is only five floors high, but it does not have the necessary fire breaks and the balconies are wooden.

Their management company, Clear Building Management says each leaseholder faces a repair bill of £20,000 and only one insurance company will provide cover for the building.

As a result of the defects, the insurance premiums have risen from £300 to £3,000 last year to £5,000 this year.

Jo and her partner are getting married next year now all of their spare cash is being used to pay for their building costs, which are not their fault.

Danish Yasin has lived at Compass Point since 2016. When his family bought the apartment none of the safety concerns were highlighted in the searches and surveys.

He says the stress of the soaring costs is causing sleepless nights and he fears a breakdown as a result of the financial pressure.

The campaign group, Manchester Cladiators have long campaigned for a government fund to support leaseholders affected by safety defects and for insurance companies to stop profiteering.

In some cases, buildings’ insurance premiums had increased by more than 1,000% – adding another cost for leaseholders caught up in the building safety crisis.

Following widespread issues, the Financial watchdog, the Financial Conduct Authority was commissioned to carry out a review and suggest ways to bring prices down.

A key recommendation is for the insurance industry, to come up with a scheme for multi-occupancy blocks to share the risks.

"Riskpooling" is a commonly used system in the insurance industry in which a number of insurance policies are put together into one big portfolio and the cost is spread if a catastrophic event takes place. 

The FCA report highlighted the high levels of commission, on average 30% of the total premium, is being charge by brokers and that this an “area of concern”.

It also found that brokers were sharing part of their commissions, often 50% or more, with the managing agents or freeholders that initially employed them.

This practice was slammed by new housing secretary Simon Clarke in his response to the FCA report, saying that “managing agents taking kickbacks was wrong and must be stopped urgently”.

Mr Clarke said: “Leaseholders must be protected, and I welcome the light the FCA’s report has shone on some alarming, if not abusive, industry practices.“

My department will closely consider every recommendation and will set out our full response in the coming months.”

A DLUHC spokesperson said: “Building owners with properties between 11 and 18 metres must comply with the law and front up costs to fix their unsafe buildings.

“Experts widely recognise that low-rise buildings are unlikely to need costly remediation, but it is building owner’s responsibility to ensure their properties are safe.“

The government says it is working at pace to bring down the cost of insurance for leaseholders.

The 52 apartment owners at Compass Point in Manchester and the many more across the north west say that cannot come soon enough.

In the middle of the cost of living crisis, they say they cannot afford to boost insurance companies profits.

Managing agent of Compass Point, Clear Building Management, says it is focused on raising awareness of the crippling costs of building insurance premiums for leaseholders this year, with many facing paying twenty-times the annual costs of 12-months ago to renew.

In particular, the company is working to engage with local and national government with the goal of securing support for a government backed ‘FireRE’ fund, similar to those set-up to support protection from flood, and terrorism - “PoolRE” for Terror risks and “FloodRE” for Flood Risks.

CBM believes that this ‘FireRE’ scheme needs to be urgently introduced, and must have the Treasury as ultimate underwriter so that mass market insurers can re-enter the market and get affordable re-insurance for the fire risks. 

Clear Building Management’s Ian Hollins, Director, says: “This issue is happening now, in buildings everywhere, that like Compass Point, are suffering excruciating insurance premiums with onerous terms, and we are committed to doing whatever we can to raise awareness of the issue and get leaseholders the financial support they need.”

A lift at Compass Point has not been working for the past two months, leaving elderly residents on the higher floors say they are struggling to leave the building.

Leaseholders have been told by CBM they do not have the funds to fix the lift, as a result of the insurance costs.

They have told residents they are working on the 'cashflow' issue and will look to fix the lift as soon as possible.

Jo Davies and her partner have been forced to rent out their apartment as they still can't sell it.