In the period since the tragic Grenfell Tower fire of 2017, understanding unsafe cladding has been a key issue when it comes to mortgages. Many of those living in similar buildings have been unable to remortgage or to sell their properties. Steps taken in response to the Grenfell Tower tragedy understandably resulted in revised regulation surrounding cladding and fire safety.
Measures included needing an ‘EWS1’ form, when applying for a mortgage. This is a type of safety certificate introduced after the Grenfell disaster. This form requires a professional survey of the property to determine the safety and suitability of the cladding, insulation and other materials used in its construction. Being unable to get this certificate has meant that some leaseholders and freeholders of high-rise buildings have become trapped in their existing mortgages.
The introduction of new industry guidance in January 2023 issued by the Royal Institution of Chartered Surveyors (RICS), helps valuers assess properties with cladding. As a result of this guidance, owners may now be able to sell and remortgage more easily, due to six major lenders agreeing to lend on affected properties. The six lenders who have updated their criteria are: NatWest, Santander, Barclays, HSBC, Lloyds and Nationwide.
It is a positive step forward in an area of lending that has been challenging. You will however, need to provide evidence that at least one of the following applies for you to get a mortgage from one of the six lenders:
- You are covered by one of the recognised Government schemes – the Developer Remediation Contracts, (buildings 11 meters or taller) the Medium Rise Scheme (buildings between 11 and 18 meters) or the Building Safety Fund (buildings taller than 18 meters) or you are covered by the leaseholder protections in the Building Safety Act.
- If required your building will be fixed by the developer. as developers must agree to remedy serious fire safety defects in their blocks or be banned from starting new developments under the latest government cladding update.
Unfortunately, this means that if there is no remediation plan in place and you aren’t covered by one of the existing Government schemes, it will remain challenging to get a mortgage.
As the evidence required varies by lender, it is best to understand exactly what evidence is required before you apply. So, whilst it is positive that Banks will now lend on properties if the mortgage application meets individual lenders’ policy and regulatory requirements, there is still some way to go. Some lenders remain cautious about the government guidance surrounding higher-risk buildings
Henry Knight from Springtide Capital comments: ‘Existing homeowners who have found finding a mortgage deal on their property almost impossible are in a stronger position now in 2023. It is crucial that more lenders join the six existing banks to give customers as much choice as possible through increased competition’
Our expert advisors are here to find the right financing option for you. We understand the criteria required and can help improve your chances of a positive mortgage offer. Contact us today on 020 8154 7280
Cladding External Wall System (EWS) FAQs (rics.org)
Valuation approach for properties in residential buildings with cladding (rics.org)
Developer remediation contract – GOV.UK (www.gov.uk)
Medium-Rise Scheme (MRS) pilot opening: leaseholder factsheet – GOV.UK (www.gov.uk)
Remediation of non-ACM buildings – GOV.UK (www.gov.uk)