The Department for Levelling up, Housing and Communities has written to mortgage lenders asking them to ease their sub-letting rules and fees for shared owners affected by the cladding crisis.
Currently, homes developed with government grant funding under the Affordable Homes programme only allow shared owners to sub-let in “exceptional” circumstances.
Designed to prevent homes built with public funds from being used for commercial gain, the government now wants to amend the rules to make issues of building safety - ie cladding - an exceptional circumstance.
Housing minister Christopher Pincher told lenders in a letter published yesterday (January 12): “I do hope that you appreciate the position that the affected shared owners have found themselves in with regards to building safety through no fault of their own, and that you will make every effort to approve their sub-letting requests.”
To sub-let their homes, shared owners must obtain permission from their mortgage lender.
Pincher has therefore “strongly encourage[d]” lenders to extend the period in which they can let out their property before converting to a buy-to-let mortgage, otherwise known as the ‘consent-to-let’ period.
“This will save shared owners money they otherwise would have had to pay to convert their mortgage,” said the minister.
In his letter, Pincher also asked lenders to waive the annual 1 per cent premium for shared owners who choose to sub-let over the course of their consent-to-let period.
He went on to acknowledge lenders will need to assess their organisational risk profiles and review their responsibilities under competition law, but ultimately ruled that firms should make “every effort” to approve shared owners’ sub-letting requests.
This week, Secretary of State Michael Gove wrote to developers requesting they stump up £4bn by early March for remediation work on cladding on 11-18 metre buildings.
In his letter, Gove told developers he was “prepared to take all steps necessary to make this happen”, going as far as to threaten a “solution in law”.
Pincher echoed Gove’s stance on the cladding crisis in his letter, clarifying the government’s stance as: “We must protect ordinary leaseholders, and guarantee that no leaseholder living in their own flat will pay a penny to fix dangerous cladding.”
The cladding crisis, a product of government reforms following the deadly Grenfell Tower fire in 2017, has created an estimated 2m mortgage prisoners who are unable to sell their homes because lenders refuse to lend to those interested in buying their flats because of concerns about cladding.