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Cladding and leasehold issues combine in a nightmare scenario for homeowners

Friday 29 November 2019

Sales of flats are being blocked by valuers who are declaring them to be worthless until more is known about the external cladding material on the block.

Thousands of sales have been stalled following official guidance from the Government’s Advice Note 14. It appears that the advice note has had unintended consequence, as it does not just cover Aluminium Composite Material (ACM) – the material at the centre of the Grenfell Fire disaster – but other material including wood.

Mortgage companies and insurers are placing a value of as low as £0 on a flat if any cladding is present until it can be determined what the material is and what, if anything, must be done to remedy it.

Aftermath of Grenfell

The Grenfell Tower fire had a major impact on building and safety rules in the UK, particularly for high-rise residential structures. ACM cladding was the initial concern, but in late 2018, the focus was widened, with Advice Note 14 aiming to provide clear guidance on what steps to take with about non-ACM materials on the external walls of high-rise buildings.

Combination of leasehold issues

Nearly a year later, shared owners and leaseholders struggle to sell or remortgage their flats, as surveyors and mortgage lenders require assurances that the materials on their buildings comply with the government’s advice.

High profile cases have been reported over the past year in the Express, Fire and Risk Management Journal, and the Guardian, where luxury flats have fallen significantly in price after the cladding was found to be problematic, or been otherwise unsaleable.

Luxury flats are not the only properties affected. Many everyday homeowners have taken to social media using #MyCladdingScandal to tell their stories, as they face huge bills for the cost of repair. For many homeowners, this has combined with existing leasehold issues such as increasing leasehold fees and costs to create a situation where many fear bankruptcy and homelessness, as they are faced with paying thousands of pounds in repair bills or moving out of the property.

Advice note 14

Advice Note 14 is one of 22 Government advice notes issued after the Grenfell fire. It is not likely to be permanent, as the government put forward legislation to bring in a new building safety bill, which includes the creation of a new building safety regulator. Any new guidance is expected to maintain the same principles as Advice note 14 and possibly go even further. This means that inspections and remedial work – already subject to delays due to a lack of available surveyors – are likely to be needed for several years. 

PROPERTYMARK LEASEHOLD RESOURCES

Propertymark has lobbied on leasehold issues and has a number of resources for both consumers and agents looking to navigate a leasehold purchase or sale.

Agent resources Consumer resources