"It has been a long road for many and at one point, it looked like the cost of remediation work – or at least a portion of it – would fall on leaseholders."
The start of the year has brought some welcome news for those living in flats blighted by the cladding scandal.
Six of the major lenders: Barclays, NatWest, Lloyds, Santander, HSBC and Nationwide, all agreed that from January 9th, they would once again lend on such properties - subject to there being a remediation plan in place.
The move comes on the back of new guidance issued by the Royal Institution of Chartered Surveyors (RICS) on how best to value such properties.
The development will come as a relief to those who have been unable to move or remortgage since the devastating Grenfell Tower fire in 2017, which killed 72 people and exposed the dangers of the combustible cladding installed on numerous tower blocks.
Ever since, leaseholders living in flats with similar style cladding have not only been unable to move but also burdened with additional costs and stress associated with the cladding.
So high was the fire risk, that many residents have had to employ ‘walking watchers’ to patrol the buildings overnight in case a fire breaks out. Given the monthly cost of such patrols went into several thousands of pounds, some occupants had no choice but to work in shifts and carry out the checks themselves.
It has been a long road for many and at one point, it looked like the cost of remediation work – or at least a portion of it – would fall on leaseholders. The introduction of the Building Safety Act 2022 last summer however ensured the cost of removing cladding from unsafe buildings would not be the responsibility of qualifying leaseholders.
The guidelines and the commitment from lenders is a huge step forward but there are several caveats attached. One is that it will only apply to buildings in England which are over 11 metres or five storeys high. For mortgage purposes there must also be evidence the leaseholder qualifies for a recognised Government or developer remediation scheme or is covered by leaseholder protections in the Building Safety Act.
The guidance will no doubt continue to evolve as we go further down the road but for now at least it will be a welcome step for the thousands of leaseholders stuck in once unmortgagable properties. It is hoped in time more lenders will come on board to offer mortgages on flats with cladding – perhaps once the main six have tested the water first.
While the initial six lenders have agreed to lend on such properties, each still has its individual requirements for applicants, and this is another area we may see develop as the guidance is tested in real life scenarios. Some will still request an 'EWS1' form to lend, for example, a type of safety certificate that confirms the external wall cladding system has been assessed by a qualified inspector.
For surveyors, we are still in somewhat unchartered water. When it comes to valuing such properties, there is going to be little in the way of comparable data, which will naturally make for a more cautious surveying community. It will also be some time before we see the impact the Grenfell tragedy has had on buyer appetite for such properties, especially if the remediation work is yet to be carried out.
Nevertheless, the guidance and assurance from lenders offers light at the end of the tunnel for affected leaseholders; a high number of whom would have bought their flats long before 2017 and intended to move after a couple of years, potentially having expanded their family and outgrown the property.
There may well be a few hoops for those in the affected flats to jump through, but at least we finally have those hoops, rather than none at all.
