For many years, homeowners in high-rise blocks with unsafe cladding or other fire-risk features have been unable to sell or refinance their properties. The devastating Grenfell Tower fire of 2017, which claimed 72 lives due to rapidly spreading flames caused by combustible cladding materials, was the catalyst for lenders to withdraw mortgage provisions for buildings with known fire safety hazards. But now, six leading high street lenders have finally given the green light to offer mortgages on flats with problem cladding, effective January 9th, 2023.
Why is this Policy Change So Significant?
This change is a much-needed step forward for homebuyers who need to secure mortgages on flats with cladding issues. After the Grenfell Tower disaster, many Londoners could not sell or refinance their homes and faced high costs for remedial work. The new policy finally offers some hope for these unfortunate leaseholders.
What Caused the Problem in the First Place?
Before the Grenfell Tower fire, building regulations concerning combustible materials needed to be properly enforced. In some cases, government guidelines even allowed for the use of such materials. As a result, lenders could not offer mortgages on affected properties due to the difficulty in valuing them. However, the Royal Institution of Chartered Surveyors (RICS) issued valuation guidance to banks last year, bringing “clarity and confidence” to the market. Valuers will now receive training from RICS experts to ensure a consistent approach is taken in assessing timelines and funding sources for remediation work when preparing cladding reports for mortgage purposes.
How Can Leaseholders Benefit?
Now, mortgages are available for properties with a remediation plan or where legal protections have been secured. This will finally allow some owners of apartments in buildings over 11 meters in height to move home. Buyers can feel confident that plans are in place to address the identified risks, but sellers should be aware that the prospect of disruptive remedial work may impact the price offered by buyers.
Which Banks are Involved?
NatWest, Nationwide, HSBC, Santander, Barclays, and Lloyds are currently offering mortgages for properties that meet RICS guidelines. Most of these banks have stated that filling out an external wall safety form (EWS1) may not be necessary. Still, mortgage applicants will need to provide evidence of protections being secured or funding for remedial work being raised.
If you’re looking to sell a property in a building with a remediation plan or required protections in place, don’t hesitate to reach out. Our independent, family-run estate agency offers a personal touch, and we’ll always go the extra mile to help you find a buyer.
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For more information click here to do directly to the RICS website.