The council was responding to a case where a valuation on one of its flats came back as nil. The block uses internal insulation on the building that was present at Grenfell Tower.
Mayor of Hackney Philip Glanville said building owners across the country had been caught out by a new requirement from mortgage lenders for specific documentation related to changes in regulation.
“The new requirement by mortgage lenders has taken building owners across the country by surprise and, like other councils, housing associations and developers, we are working as quickly as we can to provide the necessary documentation for our leaseholders,” said Glanville.
He said that a series of advice notes from government had added to the confusion.
“While we are confident that these homes are safe, the government’s unclear and contradictory advice over the last year about the actions that building owners need to take around safety has led to widespread confusion from landlords, mortgage lenders and the wider public,” Glanville said.
The guidance has resulted in surveyors having to produce nil valuations unless there is clear evidence that high-rise buildings comply with the new standards and a freeholder certificate. Such a certificate constitutes a new requirement from lenders.
John Baguley, tangible assets valuation director at the Royal Institution of Chartered Surveyors (RICS), said: “There is confusion in the industry and amongst the wider public about how building regulations govern existing tall residential buildings constructed before the ban, announced on 21st December 2018, on combustible cladding for new residential buildings in England above 18 metres high, that may have different forms of cladding. The new rules only apply to new buildings and not to existing ones.
“This confusion in the market is causing issues for those wanting to buy or sell a home in a high-rise building. Additionally, lenders usually will not help to finance any properties that are thought to be unsafe.
“There is a need for consistency across the board with clear lending policies for lenders. To help with this, RICS is working with UK Finance to produce guidance which will be published shortly,” Baguley added.
UK Finance, the banks’ trade association, said: “Lenders will request mortgage valuations from an independent surveyor when deciding whether to lend. This will take into account a range of factors that affect value, including building safety and any associated remedial costs.
“As with any mortgage application, each lender will consider whether to lend on a case-by-case basis.”
Kate Davies, executive director at the Intermediary Mortgage Lenders Association, which represents 42 lenders that distribute through the broker channel, said: “It’s not surprising post-Grenfell that lenders want to be ultra-cautious in terms of not lending on the buildings that haven’t been certified as compliant.
“You can imagine the potential implications if a lender had knowingly taken a risk. It’s unthinkable. But that doesn’t help the people living in blocks where the freeholder is being slow to take remedial action.”
Glanville added: “Until the government clarifies its guidance and urgently publishes a timetable for a root and branch reform of the building regulations these issues will remain.
“We want to reassure everyone living on Kings Crescent Estate that their homes are safe as verified by fire risk assessment of all the new buildings,” he said.