The Cladding Issue

Over the past two years, we have been helping clients navigate the ever-changing rules imposed by lenders and the Government around the mortgage-ability of homes with potentially dangerous cladding or those which still contain fire risks. The risks still being - flammable material clad to the outside of homes, and/or wooden balconies stacked above each other, another fire risk lenders are cautious of lending against.

Michael Gove took over as Housing Minister in September of last year with a big job ahead of him and we have been waiting for The Housing Bill to go through parliament that will set down in law how this issue is to be resolved.

The latest from Michael Gove is that he is looking to stop housebuilders from selling homes if they do not sign up for the voluntary repair scheme. So far £2bn of funds have been committed by major housebuilders to repair the homes of larger properties (over 4 stories) that they had developed. A further £3bn is being collected by Government from a new levy imposed on developers when building new homes.

From a lender’s perspective, they are in different camps.

Camp 1

Will not lend on any flats at all.

Camp 2

Will only lend when an acceptable certificate has been issued, called an EWS1.

Camp 3

Will lend on properties below a pre-set number of floors be it 4,5, or 6.

For flats still with cladding and no valid EWS1 borrowers are stuck without being able to sell until these promised funds have been spent and these homes have been deemed safe. The Housing Bill due to go through soon is aimed to fix that.