Six of Britain’s biggest banks will start lending to mid- and high-rise flats with cladding from January, in a move that could help thousands of people stuck in properties they have been unable to sell or remortgage.
Lenders including Barclays, HSBC, Lloyds, Nationwide Building Society, NatWest and Santander said they would assess new mortgage applications from January 9, after receiving long-awaited guidance from the Royal Institution of Chartered Surveyors (Rics) on how to value affected properties.
The changes benefit mortgagees and potential buyers of cladding-damaged apartments in buildings more than 11 meters high, although they still have to prove that the hazardous materials will either be removed by developers, or covered by tenant protection or a specific government scheme.
Banking lobby group UK Finance said in a statement that the announcement was a “significant step to enable lending to resume”.
Mortgage lenders pulled back from lending against cladding flats in the wake of the Grenfell Tower disaster, which exposed costly safety problems in buildings across the country.
The banks said a lack of up-to-date guidance on valuations has until now limited their risk assessments and ability to lend against the affected flats.
“Lenders have confirmed that this will help get the property market moving again by helping buyers and innocent tenants, who have been stuck for too long, to sell their homes,” said Local Government and Building Safety Minister Lee Rowley.
“This is possible because of the protection for tenants in the Building Safety Act, and our commitment to build up, either through our own improvement schemes or as a result of the promise from developers.”
Campaigners cautiously welcomed the move. “It sounds positive and is a step in the right direction, but there is a question of how it will be implemented on the ground,” said Giles Grover, the co-chair of the End Our Cladding Scandal campaign.
For example, he said property owners will be concerned about how tough assessments can be, and how much of a property’s value could suffer as a result of remaining cladding, regardless of plans to remove it. There were also questions about the cost of building insurance, which has not yet been resolved.
Rics is expected to monitor the impact of the new guidance to ensure it is “proportional, fit for purpose and helps to simplify mortgage lending”, an industry statement explained.