Regulation  

Mortgage market suffering under cladding crisis

The MHCLG committee said that addressing all fire safety defects in every high-rise or high-risk residential building could cost up to £15bn – dwarfing the total government funding for cladding remediation (including ACM) to date of £5.1bn.

As of January 31 2021, of the 461 high-rise residential and publicly owned buildings identified with unsafe ACM cladding, remediation has either completed or started on 419 – 91 per cent of all identified buildings.

The Welsh, Scottish and Northern Irish governments are still trying to finalise their funding solutions for unsafe cladding.

Dominik Lipnicki, director at Your Mortgage Decisions, says: “Cladding is only one of the issues. [Government measures do not] cover concerns over sprinklers, breakout doors and timber balconies.

“I realise far more people die in properties over 18 metres, but we are not just doing this for that. We are doing this so people can sell and remortgage, and surely that is affected whether the property is 17 metres or 90 metres.”

Footing the bill

Russell Quirk, co-founder and property expert at Moving Home Advice, says: “[The £3.5bn headline] hides the reality that unsuspecting leaseholders are still on the hook for the mistakes of developers, contractors, local authorities and government-led building regulations that have proven woefully inadequate.

“The typical cost of remediating unsafe cladding across the country is a catastrophic £45,000 per flat when you include peripheral costs. Robert Jenrick’s £3.5bn is not enough. [The loan will take] up to 60 years to pay off and... will hang around leasehold ownership like a noose around their innocent necks.”

The government says it is prioritising unsafe cladding, which is a higher risk and can act as a fire accelerant, and is a greater risk in higher-rise blocks, adding that building safety is the responsibility of the building owner and they should meet the costs of remediation without passing them on to leaseholders wherever possible.

A report by the BBC in January found a clause in the Building Safety Fund contract, indicating the applicants – managing agents and building owners – would be financially liable for any repair work not covered by the fund, but some were refusing to sign the document.

What is also unclear is how long property owners will have to wait for the before the remediation works are completed and when the EWS1 studies can be carried out, particularly when there are not enough qualified engineers to do the surveys.

Intra Private Finance's Kandemir says: “The struggle has been not having sufficient support from the managing agents of the property, coupled with the lack of direction from the relevant regulations. 

“The government seems to have enacted a regulation the market is not prepared for. One would have hoped that a type of government guarantee would have been sufficient, to ensure that the regulations are more thought-through and a sufficient number of qualified surveyors/sub-contractors conducting the studies can be appointed.”