The 2017 Grenfell Tower fire, in which 72 people died, prompted big changes to the rules around fire safety for blocks of flats, with a particular focus on getting rid of dangerous cladding.
While that’s great news, it had an unfortunate knock-on effect on mortgage lending. That meant owners of properties with cladding issues found themselves unable to sell and buyers wanting to purchase flats in blocks with cladding were unlikely to get a mortgage approved. According to reports, thousands of homeowners could have been trapped by the changes in legislation – however there’s now some good news for them.
Thanks to the Government, mortgage lenders and surveyors working together, as of 9th January 2023, mortgages can now be secured on affected properties - even those over 5 storeys or 11 metres high.
Not all lenders are on board yet, but most of the major lenders are, including: Barclays Bank, HSBC, Lloyds Banking Group, Nationwide Building Society, NatWest and Santander.
However, lenders will still need to evidence that buildings will be self-remediated by developers or covered by a recognised Government scheme in England, e.g.:
- The Developer Remediation Contracts (11 metres+)
- The Medium Rise Scheme (11-18 metres)
- The Building Safety Fund (18 metres+)
- or by leaseholder protections contained in the Building Safety Act, such as the Leaseholder Deed of Certificate.
What should you do if you want to buy, sell or remortgage a property with potential cladding issues?
Mortgage lending is subject to regulatory requirements and individual firms' lending policies, which are impacted not only by the property, but also your own personal circumstances.
So, while you could approach a lender directly, it might be better to consult with a mortgage broker. They’ll understand the new policies and rules, and will be able to approach the lenders that are most likely to support your particular application.
A broker can also help you understand the latest mortgage rates across the whole market – and they’re not necessarily as high as the 6% quoted by much of the media! If you’d like to discuss your options, whether you’re remortgaging, selling and/or buying, you can book an in-person or phone appointment with our partners, Embrace Financial Services, via our website.
And if you’ve got any questions relating to cladding and how it might affect you and your property, we’re always here to help. Just get in touch with your local Your Move branch.
Additional sources:
Millions of householders: https://www.insidehousing.co.uk/insight/insight/fact-check-how-many-people-live-in-buildings-with-dangerous-cladding-67000
https://www.wrighthassall.co.uk/knowledge-base/building-safety-act-2022
https://www.propertymark.co.uk/resource/mortgage-products-available-on-flats-impacted-by-cladding.html
https://www.ftadviser.com/mortgages/2022/12/21/lenders-to-offer-mortgages-on-flats-with-cladding-under-new-guidance/?page=1
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Your initial mortgage appointment is without obligation. Embrace Financial Services normally charge a fee for their services; however, it is payable only on the submission of your mortgage application. The fee will depend on your circumstances but the standard fee is £549. Complex cases usually attract a higher fee. Embrace Financial Services will discuss and agree the fee with you prior to submitting any mortgage application.
Please be aware that the information provided within these archives has been pre-published, as of the date published on each article. The information contained within, including references to taxation, legislation, regulation, or any other issues or concerns may no longer apply.
The Your Move Content Marketing Team
