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UK Financial Adviser

Cladding – Restrictions finally eased to allow sales/remortgage on the properties affected

If you have been affected by the government regulations on fire wall safety and cladding when trying to sell or remortgage your property, there have finally been steps taken to remedy a situation that has left many property owners in chains to their mortgage provider or unable to sell their properties. 

The Royal Institution of Chartered Surveyors (“RICS”) has now published new guidance on cladding and valuations. This aims to provide guidance to valuers undertaking valuations for secured lending purposes of domestic residential flats, within residential blocks of 5 or more storeys or 11 metres or more in height. 

In light of the Building Safety Act, mortgage lenders and The Royal Institution of Chartered Surveyors (RICS) have issued a statement to clarify the current lending position for buildings impacted by building safety concerns.

The lending and valuation industries welcome the work the Government has undertaken to ensure that leaseholders in properties impacted by cladding and building safety issues will be protected from the costs of remediation. The introduction of the developer self-remediation scheme, Government’s plans to re-open the Building Safety Fund and a new remediation scheme for buildings between 11-18 metres will help to remove the financial risk to leaseholders in blocks of flats 11 metres and above. 

The Government has agreed to make available, as permitted, details of the buildings included in these schemes for use by sectors and key participants in the home purchase process, ensuring transparency for all.

Alongside this, providing the mortgage application meets individual lenders’ policy and regulatory requirements, lenders will lend on buildings that will be self-remediated by developers or captured under a recognised government scheme or there is evidence of a qualifying lease certificate.

The recognised remediation schemes are:

  •  The Developer Remediation Contracts (11 metres+)
  • The Medium Rise Scheme (11-18 metres)
  • The Building Safety Fund (18 metres+)
Anyone purchasing a flat that is eligible for remediation under one of the above schemes is advised to talk to their estate agent and conveyancer in the first instance.

RICS agrees that the Building Safety Act has played a critical role in unlocking the lending market regarding properties with cladding and this will create a vehicle to allow valuations on all blocks of flats as identified above.

There are Lenders now available to consider mortgages for properties that in the past would not have been able to get a mortgage or sell their property due to the regulations which impacted the lenders ability to lend to them. Amongst these will be Barclays Bank, HSBC, Lloyds Banking Group, Nationwide Building Society, NatWest and Santander.

Written by: Nwabisa Janda

Date: 23rd January 2023

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