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Michael Gove has launched a legal action to force the landlord of a Canary Wharf apartment complex to pay £20.5mn towards building safety works, as the UK government increases efforts to pursue the owners of buildings for post-Grenfell remediation costs.
The housing department has applied to a property tribunal for an order to require companies in property tycoon John Christodoulou’s Yianis Group to contribute to fixing safety issues at the Canary Riverside development, according to government officials and the property tribunal.
The action, which accompanies orders against two other companies, marks the first move by the department Gove leads to use legal powers under the Building Safety Act.
Passed in 2022 in the aftermath of the Grenfell Tower fire, the legislation was designed to force landlords to pay for vital safety improvements.
The housing department said: “Where developers and freeholders have profited from unsafe buildings, we will use powers in the landmark Building Safety Act to recover funds . . . We will continue to take action against those who do not take responsibility for building safety issues.”
The act allows the government, regulators or other “interested persons” such as leaseholders to apply for orders requiring building owners, developers or others to fix building safety defects or make payments towards the costs.
Yianis Group said it had seen the government’s application, but that it had not been served on the companies. “We are not going to comment on this matter save as to say that the [secretary of state] has taken such action without as much as requesting a meeting with the companies,” the company said.
The government is seeking the order against Yianis Holdings Ltd and two other companies in the group. Yianis said that property tribunals had found that the two other companies were “accountable persons” under the act for the four residential buildings within the Canary Riverside development.
Accountable persons have responsibilities for safety matters under the legislation.
Inspections of the buildings identified problems with cladding and insulation that needed to be remediated, according to the development’s website.
The Grenfell fire killed 72 people when it spread through the external cladding of a west London tower block. It triggered a building safety crisis that led to defects being identified in residential blocks across the country and has left some leaseholders unable to sell their properties and facing huge bills.
Some landlords have sought to pass remediation costs on to leaseholders. The government has consistently said freeholders should recover costs for fixing unsafe dwellings from developers, and brought in legislation to protect residents in taller buildings from having to pay for replacing cladding.
In addition to the £20.5mn it is seeking from Yianis Group, the housing department is seeking orders against two other companies, the insiders said.
It wants property group Urban Splash to pay £46mn of remediation costs at seven buildings in Manchester, and developer Hollybrook to pay £3.4mn for a building in London. In total the three actions seek to recoup £70mn.
Urban Splash declined to comment. Hollybrook was contacted for comment but did not respond before publication.
Leaseholders at Canary Riverside won a rare and high-profile victory in late 2022 after a tribunal ruled they had been overcharged £1.6mn in purported insurance-related services and linked taxes.
The first-tier tribunal criticised a “complete lack of transparency with leaseholders regarding these commission payments” by the freehold owner and a management company, both Yianis Group subsidiaries.
The upper tribunal, which ruled this month, found partly in favour of the landlord but said it had “failed to demonstrate” that it was entitled to any more than £579,000 of the £1.6mn.
Leaseholders pay towards insurance policies that cover the whole building, but typically have no control over how that policy is chosen or the level of commission shared with brokers and freeholders.
Premiums, and commissions, have surged since the Grenfell fire for buildings with combustible cladding and other building defects.
