The Problem with Cladding
Over four years on since the worst residential fire in the UK since World War II, there are still an estimated 3 million properties that are currently unsellable as lenders are requiring proof they are safe. As a result, there may still be up to 11 million people living in properties with unsafe cladding.
Following the December 2018 ‘advice note 14’ from the UK government, clear guidance was set up for building owners and lending criteria became stricter overnight. This has caused numerous financial issues as a result, with thousands of leaseholders becoming ‘mortgage prisoners’.
In buildings with a cladding issue, mortgage acquisition and remortgaging are on hold until repairs are made, as buildings do not meet the new legislation. Buyers are having mortgages rejected because the building (or their flat within the building) has not been signed off as safe, and owners cannot remortgage at the end of their fixed rate contracts, resulting in varying (and often high) interest rates.
Furthermore, a number of large construction projects now have delayed sign-off and new properties cannot be sold until the cladding has been updated. For any still willing to invest, properties are higher risk as purchasing may come with the burden of cladding replacement costs or lower tenant demand due to the below-par fire safety standards.
