By Joe Locker, Local Democracy Reporter
Mansfield District Council has been hit with a higher insurance bill on a building it owns in London due to the need for urgent fire safety works costing £20m.
The bought the building in Bedford Road, Clapham, as an investment for £5.95m in January 2017 as a way of diversifying income amid Government cuts and austerity.
But investigations in 2018 following the Grenfell Tower disaster found “a number of issues” needed to be addressed.
This included problems inside the walls which would make it difficult to contain a fire, and an absence of fire safety resistance in materials used to construct key escape routes.
An investigation by the Local Democracy Reporting Service uncovered the issue and the associated costs in 2022.
In total the authority has budgeted around £20m between 2018 and 2025 to fix the problems.
But new reports show that, as a result of the issues, the council has experienced trouble securing an insurer for the building.
While it has since secured a policy, the premium will be increasing by 7.91 per cent from £259,779.68 in 2023/24 to £282,085.91 for 2024/25.
A council report on expenditure of council-owned property says: “The extent of the building defects at the property make this an unattractive building to insure.
“In 2022/23, the council experienced difficulty securing an insurer for the property but eventually secured insurance with Touchstone.
“The policy was renewed with Touchstone for 2023/24. The policy essentially splits the risk across multiple insurers and as such manages their individual risk profile.
“Having consulted the insurance brokers, they have managed to secure renewal terms with Touchstone. At present risks such as this where there are known issues in relation to fire safety are extremely hard to place and insurers are actively stepping away from providing terms.
“The brokers therefore recommend that we renew with Touchstone on the terms presented.”
Approximately 15 per cent will be recharged to the occupants through annual service charges and the remainder will be funded by the council as the landlord.
The £239,773.02 to be paid by the council will be split over two financial years, and savings in its property portfolio must be found to pay for the increase in the required budget for the insurance costs.
The authority says it is taking legal action, and through this the council is seeking to recover the additional costs.
While repairs are taking place, it was previously reported residents in all 40 apartments will be required to move out and into temporary accommodation.
The building is expected to be rebuilt internally with floors, walls and ceilings ripped out.
Work was supposed to begin in 2022, however Lambeth Building Control has rejected the council’s application due to a lack of information.
The council’s public planning database shows plans remain ‘rejected’, but it was understood negotiations were taking place to resolve the issue.
In an update yesterday (March 27), a Mansfield District Council spokeswoman told the Local Democracy Reporting Service only some residents will be required to move out, while some may be able to remain while works take place.
Work is now expected to begin in the autumn.
“There are three phases of work planned and some tenants will be temporarily relocated whilst these phased works are delivered,” the spokeswoman said.
“Other residents will be able to remain safely in situ whilst the works are undertaken.
“Given the magnitude of the project and the various elements the council is piecing together, the timetable for the decant works to begin remains fluid.
“However, according to our latest project plan we are looking to start by autumn this year.”
