Industry statement brings glimmer of hope to cladding-crisis home owners

In a move that will be welcomed by the hundreds of thousands of people who are living in currently unsellable properties, The Building Societies’ Association and UK Finance have issued a joint statement concerning defective cladding and how future mortgage lending on properties in such buildings may be treated.

The Building Societies Association (BSA) represents all 43 UK building societies, as well as 6 of the larger credit unions. UK Finance (UKF) is the collective voice for the banking and finance industry, representing more than 300 firms.

The Royal Institution of Chartered Surveyors (RICS) is endorsing the joint statement which says that the lending and valuation industries agree that owners, and/or prospective buyers of flats should have confidence that the home they live in, or wish to buy, is safe and free from fire safety defects.

The statement continues:

In light of the recent announcements made by the Government to ensure leaseholders are protected from remediation costs associated with fixing fire safety issues in blocks of flats over 11 meters, lenders and The Royal Institution of Chartered Surveyors (RICS) are issuing the following statement to clarify the current lending position for such properties.

Providing the mortgage application meets all the lender’s other policy and regulatory requirements, the BSA and UKF confirm the following lending position:

Where the EWS1 form or equivalent assessment shows that remediation is not required A1, A2 or B1 rating, Lenders will continue to lend.

Where the EWS1 form or equivalent assessment recommends remediation A3 or B2 rating, Lenders will take the necessary steps to facilitate lending where a costed and funded remediation plan is agreed with committed dates for starting and finishing all specified/required work.

[A B2 rating shows that combustible materials are present and need to be removed. A3 refers to items fixed to the external walls, which need to be removed.]

To achieve this, Lenders will work with the Government, RICS, the Building Societies Association (BSA), and UK Finance to establish a framework to enable verification of these key requirements, to ensure transparency for leaseholders, and prospective purchasers.

RICS supports the above, as this will enable valuers to provide a valuation within their existing obligations under RICS and international standards, which reflects the costed and funded remediation plan. RICS expect that EWS1 assessments are undertaken in accordance with the British Standards Institution’s (BSI) PAS 9980.

Lenders and RICS will continue to work with Government and key industry stakeholders to develop a proportionate approach to addressing this situation for leaseholders. This will include a further review of lending and valuation policies in relation to lending on properties rated EWS A3 or B2, once the Building Safety Bill becomes law and enshrines the statutory protections for leaseholders and details the operation of the Remediation Order regime.

Lenders supporting this statement as at 31 March 2022 are: Barclays Bank, HSBC, Lloyds Banking Group, Nationwide Building Society, NatWest and Santander

UK Finance and the Building Societies Association are working on a second phase, expanding the agreement to include more lenders in the coming weeks.

The End Our Cladding Scandal campaign group is reported as saying:

“We welcome the joint statement from the lending and valuation industries with our usual cautious optimism.

“We can only have hope rather than firm expectation that the crisis we are living through is near an end.”


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