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Cladding and Lending

The repercussions following the dreadful Grenfell tragedy back in 2017 will forever be with the families and friends of those that lost lives. Nearly 30 months on and you will be forgiven for thinking that any affected tower blocks have been dealt with when it comes to cladding. Those that live in modern private developments will certainly be forgiven for thinking they are not affected by such problems. However, this is far from the truth.

Sways of mortgage valuations conducted on properties that are in some cases no more than a year old are being returned by surveyors at a £0 value. This does not mean that your block is necessarily deemed as unsafe, more of a confusion as to who will foot the bill if the block does have any aluminium composite material (ACM) cladding that needs to be rectified. Don't be fooled by thinking this is confined to visible cladding itself. We have had two £0 valuations on brick built blocks of late, one of which was a Victorian building. On that particular building there were questions over the materials used in the roof and the other was the insulation used between the two penthouses, nothing to do with the flat itself.

Now, anything over 18m in height (usually 6 storeys) will most likely be zero valued, unless there is a very comprehensive fire report to show there is no risk. As with any survey inspection, the scrutiny can vary from different surveyors and the lender associated. However, a surveyors job is to both protect you and the lender against exposure and, given the seriousness of these new legislations, you will be hard pushed to simply substitute one lender for another that is more lenient.

The report themselves can take some time to conduct. Just trying to speak to a fire safety expert is virtually impossible as they are so busy being pulled from pillar to post. When they finally get around to conducting the tests, samples need to be taken away before collating the results and putting the extensive document together.

So what can be done if I have been affected?

Well, firstly if you are concerned, thinking of selling or remortgaging and living in a tall tower it is worth contacting the management company and asking if they are aware of any issues and, if so, have they made the relevant steps to testing and rectifying?

Even to this day we are agreeing sales in blocks that were not affected in the past and the management companies seem oblivious to the problem. At the very least they need to get the ball rolling.

On my block in Dalston Square, Hackney all the residents had a letter informing us that if we are thinking of selling or remortgaging anytime now until the Spring to forget it. Surely this cannot be fair. What if someone is coming round to renewing their mortgage and now on a higher standard variable rate?

What if you are really desperate to sell?

I have spoken to a number of vendors looking to take action against the management companies and freeholders. In Greenwich a group of owners at New Capital Quay are pioneering this approach by bringing a case against Galliard Homes and Roamquest Ltd, a firm owned by Galliard Homes Ltd, under the Defective Premises Act (1972) which, if successful, could act as a test case. The residents are claiming for other costs including loss of income, reduction in property value, insurance premium increases and distress and inconvenience.

Petitions, social media campaigns, demonstrations and lobbying your MP are all worth doing as many of these big companies do not want the publicity.

The question of course is who pays for the bill should works need doing?

The developers will say they built to regulations and its not their fault those goalposts have been moved. The management company will not want to foot the bill and so, as usual, the shift goes to the homeowner.

At the 11 New Capital Quay blocks the NHBC is paying for remedial works but this will not be completed until 2021. Does this mean a lender will not consider exposing themselves until then? Either way it is a total mess and one I believe the government should be taking the reigns and making funds available for. It's not as if anything else is going on politically at the moment!

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