A lender has refused to give mortgages to borrowers wishing to enter shared ownership deals on a block of flats due to concerns about fire safety and the use of space.
Leeds Building Society based its decision to deny mortgages to those looking to buy one of 53 flats located in Richmond House in Southend, Essex, on the block’s sprinkler system and uncertainty around how the commercial space on the ground floor would be used.
The lender said its decision had been influenced by a combination of issues and was based on the report by an independent surveyor.
A spokesperson for Leeds said: “An independent valuer assessed this apartment and concluded that it did not provide suitable security."
But landlord Genesis maintained the block was fully compliant with fire safety regulations.
It said sprinklers were not currently required in buildings such as Richmond House, which was seven storeys high with two stairwells for evacuation in the event of fire.
The firm said it had reviewed the cladding of the building following the Grenfell Tower blaze last year and decided to replace parts of it.
"The mortgage refusal relates primarily to the commercial space at Richmond House, as the use has not yet been confirmed. We are in discussions with the lender and prospective buyers and hopeful of reaching a resolution in due course,” a spokesman said.
He said Genesis took fire safety “very seriously” and had ensured Richmond House was “fully compliant with building regulations and fire safety requirements,” which had been independently confirmed by building control and specialist engineers.
Fire safety became a bigger issue for lenders following the Grenfell Tower tragedy in June last year, in which cladding made out of aluminium composite material caught fire and set off a blaze engulfing the whole building.
It is thought the cladding, 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.
An anonymous surveyor told FT Adviser in October lenders had started to require surveyors to carry out extra checks on things like cladding.
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.
Although Rics has denied this.
Leeds Building Society said it had not changed any of its lending criteria following the incident.
The spokesperson said: “For every mortgage application we rely on an independent expert valuation as to whether a property has suitable security for a mortgage.
"We reviewed our criteria following the Grenfell Tower fire and concluded no changes were required.”