Mortgages  

Lenders stand firm despite govt's 'change of heart' on cladding

Lenders stand firm despite govt's 'change of heart' on cladding

Lenders are not changing their risk appetites on buildings below 18 metres despite the government’s recent U-turn in its cladding guidance, according to guests on the latest FTAdviser Podcast

Speaking on the podcast, Catherine Beaumont, a mortgage consultant at London Money, pointed out her brokers “haven't really seen any lenders come on board” with the government’s new instruction that buildings under 18m don’t need EWS1 forms.

“It's just going to take quite a long time to catch up to all the lenders and for them to take this guidance on board and actually change their criteria.” For the moment, Beaumont “can't see this happening”.

Many leaseholders had found themselves “stuck” in properties deemed undesirable by lenders due to the risk of huge cladding removal bills - some estimated at as much as £70,000 - hanging over them.

Despite claims by housing secretary Robert Jenrick that the government’s announcement would “unlock” these trapped leaseholders, it seems they will be waiting some time longer.

Beaumont appeared on the podcast alongside Geoff Bramall, head of professional development at Legal & General Surveying Services.

Bramall said “it seems a little bit odd for the government to announce this sort of blanket ban effect”, when the industry was still “getting to grips” with the recent Royal Institution of Chartered Surveyors guidance.

He added that this guidance was already reducing the need for EWS1 forms, so “perhaps allowing this guidance to run for three months or so” would have worked better than “this very quick change of heart”.

Bramall was not satisfied with the research which underpins the government’s latest decision. He also highlighted the consequence of “ignoring” the need for EWS1 forms in some cases.

“It isn't fair to a customer to say, ‘Well, we'll help you buy this flat. But we'll pretend - if you like - or ignore the fact that it might have this huge obligation at some stage in the future [for cladding remediation].”

For borrowers, Bramall said this was “completely unacceptable”.

A Ministry of Housing, Communities and Local Government spokesperson said: "We're pleased that many major lenders are welcoming this move – and we continue to work closely with them and the RICS to correct the present market failure and support leaseholders to sell their properties, should they wish to do so.

“The view from the independent experts is that there is no evidence of a systemic risk of fire in blocks of flats, but excessive industry caution is leaving many leaseholders in lower risk buildings unable to sell, or facing bills for work which is often not necessary.

“This must stop and, in line with the expert advice, we’ve set out that EWS1 forms should not be requested for buildings below 18 metres and we urge the market to follow this approach."

Zooming out, Beaumont highlighted the “real lives” at the heart of this cladding crisis, and that “it's not just about lending”.