Relief for mortgage prisoners: Six banks to begin lending on flats with unsafe cladding
A handful of the country’s biggest banks will consider mortgage applications for some flats with dangerous cladding from January, in a sigh of relief for people trapped in unsellable properties.
Lenders withdrew mortgage provisions for unsafe flats following the Grenfell Tower disaster, when 72 people were killed in a fire at a high-rise block in West London in 2017.
Now, banks including Barclays, HSBC, Lloyds, Nationwide Building Society, NatWest and Santander, are to look at new mortgage applications from 9 January.
The lenders have made the decision after the publication of valuation guidance from the Royal Institution of Chartered Surveyors (Rics), which applies to buildings in England of 11m or taller.
Banks will require evidence that buildings with unsafe materials on will be remediated by developers or covered by government help or legal protections for leaseholders.
Lenders have pledged to ensure “that those who want to buy or remortgage flats affected by building safety issues will be able to access mortgage finance,” according to a statement from UKFinance.
The group, which represents the UK’s financial and banking services sector, said the move will “restore confidence in the market.”
The news would be “an early Christmas present and a huge relief” to thousands of homeowners, managing director of property developer Stripe Property Group, James Forrester, told CityA.M.
“The issue of cladding is an extremely serious one but it’s fair to say that the time taken in making this decision has been far, far too long and many have suffered needlessly as a result,” he added.
There was likely to be a “huge volume” of people “scrambling to prove that their property is now legitimate,” Forrester added.
“And so while there is light on the horizon, we expect that those impacted will still have a lengthy wait before they can actually release themselves from these properties, he said.
However, a “shambolic handling” of the issue was set to continue to put buyers off, meaning that many owners of properties with the unsafe materials on will still struggle to sell their properties.