Lenders order extra checks after Grenfell blaze

Lenders order extra checks after Grenfell blaze

Lenders now require surveyors to carry out extra checks if there is cladding on the outside of a building following the Grenfell Tower blaze, according to a surveyor.

The surveyor, who wished to remain anonymous, told FTAdviser that lenders will not agree a mortgage on a property unless reports have been produced to prove the type of cladding on the building is not aluminium composite material, which was used to clad Grenfell Tower.

It is thought the cladding on Grenfell, which has since been found on buildings across the country, allowed the blaze to spread rapidly and contributed to the deaths of at least 68 people on 14 June.

The surveyor said the Royal Institution of Chartered Surveyors (Rics) and major banks had ordered the checks be carried out by a fire safety officer, a structural engineer or another suitably qualified individual in cases where a building appears to have aluminium composite cladding on its exterior.

Rics has denied issuing an instruction to surveyors that these checks need to be carried out, although it has issued a set of guidelines for valuers.

A spokesperson said: “Rics has not issued any such advice on reports. We have recently updated our advice on valuations in light of the Grenfell tragedy, and this information is freely accessible on our website.”

But FTAdviser has seen a copy of the surveyor’s notes on a mortgage case for a commercial-to-residential conversion block in London stating that the transaction could not proceed until additional checks had been carried out.

The notes state: “The building has external cladding. In the light of recent events, a report is required from a Fire Safety Officer or a Structural Engineer with appropriate fire prevention experience confirming that the property has been inspected post-14 June 2017 and the cladding system confirmed to meet current requirements.”

The lender that was processing the mortgage, Precise, said it relied on the judgement of the valuers as to a property’s suitability.

This position was shared by all the lenders contacted by FTAdviser – Santander, Nationwide, Coventry, Yorkshire Building Society, HSBC and RBS.

A spokesperson for Connells Survey and Valuation said: "The tragic events at Grenfell Tower put the spotlight on fire safety in large blocks of flats. Where a valuer has uncertainty over the type of cladding or other fire safety measures then, in consultation with our lender client and in the absence of any other specific reporting requirements, the guidance to the valuer is to recommend further investigation prior to confirming value.

"This is to help establish whether there are likely to be any significant remediation costs that need to be considered and is in line with Rics guidance. The various cladding system tests commissioned by the government over the summer have provided some clarity and we continue to review our guidance as further information emerges."

A spokesperson for the Department for Communities and Local Government said no regulatory changes had been made since the Grenfell Tower fire that would impact on the mortgage approval process.