Residents of flats in Greater Manchester who are facing huge bills to replace flammable cladding have told of “anxiety so extreme I can’t function” and feel they are members of “generation stuck”.

A survey carried out by the Greater Manchester High Rise Task Force found 53% of owner-occupiers in tower blocks had been hit with increased service charges after the Grenfell Tower fire.

One resident said their monthly charge had increased from £90 to £480 to cover cladding replacement, with another saying their management company had proposed the cost be added to their maintenance charge to the tune of £1,000 a month.

Many leaseholders are unable to sell their homes and move on because lenders will not offer mortgages, the research found. About 70% of residents said they were worried about a fire in their building and spoke of their increasing levels of anxiety, difficulty sleeping and feeling of being trapped.

In 2014, Matthew Hallsworth and Natasha Johansson bought a flat in Albion Works, a timber-clad block in the New Islington area of central Manchester. The couple, who married six months ago, said they had sought counselling after feeling “at the end of our tether”.

“Nobody seems to be thinking of our mental safety,” said Johansson on Friday. “The anxiety is so extreme I can’t function. We’ve constantly got this money hanging over our heads through no fault of our own. I go to work and can’t concentrate, I come home, look at these four walls and think: ‘Will they set on fire, will I be bankrupted?’ How can you relax in this flat, knowing it’s a fire risk? Right now the reality is I’m more of a danger to myself than a fire.”

Fire officials also found alarms could not be heard in the flats, only in the hallways. With the policy changed from “stay put” to “evacuate” following the Grenfell Tower disaster, the building managers, Residential Management Group (RMG), said fire wardens would patrol until a new fire alarm system was installed. The 24-hour “waking watch” involves five fire wardens patrolling the 182 flats of blocks D and E, costing residents £10,000 a week plus VAT. The 12-hour shifts are being covered by an extra service charge, yet to be levied, and the residents’ reserve fund.

“We haven’t had an evacuation or tested anything with the waking watch. Their procedure – which we only know because the BBC reported it – is to shout ‘fire, fire, fire’ and knock on ‘as many doors as possible’ in the event of a fire,” Johansson said.

“We need a new boiler but at the moment we buy food at the supermarket and think: ‘Will we be able to afford this in a month’s time?’ All that money from our guests from our wedding might have to be spent on cladding.”

Having sought help from charities, the Leasehold Advisory Service, the housing minister and their MP, the couple found nobody was able to help them because their contract says they are expected to foot the bill for “reasonable maintenance costs”. “Legally, we have no protection. It’s like we’re writing a blank cheque to be imprisoned in our own home. We literally can’t move,” Johansson said.

The couple said it was an injustice that timber cladding is not covered by the government’s fund that covers ACM (aluminium composite material). Johansson said: “If timber cladding is being treated in the same way as ACM – it’s serious enough that it needs to be replaced – then why aren’t we being treated the same and receiving the same help?”

RMG said it had acted on safety advice from fire engineers, surveyors and Greater Manchester fire service regarding the cladding. Justin Herbert, an RMG operations director, said: “We are now looking to implement an integrated alarm system which will remove the need for the waking watch. The next stage will be to determine the long-term solution of addressing the cladding.

“We totally understand the concerns regarding the costs, which could not have been foreseen. We have to invoice to cover the costs in line with the lease covenants but will ensure we implement the most cost-effective compliant solution. We will continue to support the residents through this very difficult period.”

Back in Block D, Hallsworth and Johansson said they needed the uncertainty to end so they could move on. “I can’t minimise the effect this has had on us; it’s felt life-ruining. This was our future in this flat and now it feels like it’s taken our future from us. We thought we had escaped being ‘generation rent’; now we’re ‘generation stuck’,” Johansson said.

Andy Burnham, the mayor of Greater Manchester, said: “What really strikes me is the damage this is doing to people’s mental health. I was at a meeting of the High Rise Task Force and there were young people just in floods of tears, saying, ‘I can’t cope with this’, ‘It’s a living nightmare’. People should not be left in that kind of limbo with no peace of mind, not just about their safety but their finances as well.”

He said the government must ensure all unsafe cladding is removed and that residents should not have to pay for it. “It’s not the residents’ responsibility. When you buy a flat you are entitled to expect that the regulatory processes have created a flat that is safe. It is to be argued out between government and industry as to how much percentage liability there is for both sides.”

An Ministry of Housing, Communities and Local Government spokesperson said: “The government has supported an industry-led solution to manage valuations of high-rise residential buildings. We expect building owners to share the relevant information with surveyors and residents and to take proactive steps to ensure their buildings are safe as a priority.

“Building owners should follow expert advice to ensure any building safety risks are identified and fixed as a matter of urgency to make sure that residents are safe in their homes. Cost should not be a barrier to remediation, and we are working with the Treasury to address this issue.”

• This article was amended on 6 March 2020 because an earlier version erroneously included a photo of a neighbouring block, which is separate to the Albion Works flats.