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Arranging mortgages on high rise homes with cladding — what you need to know

  • 17/03/2020
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Arranging mortgages on high rise homes with cladding — what you need to know
Chancellor Rishi Sunak’s decision in last week's Budget to make £1bn of funding available to remove unsafe cladding from high rise buildings underlined the scale of the issue facing apartment owners.


The numbers of homeowners affected, according to The Times, is estimated to be 200,000.

Following the Grenfell tragedy, the government established a building safety programme to remove and replace Aluminium Composite Material (ACM) cladding from high rise homes.

The requirements apply to blocks of flats that are 18 meters high or more and the funding is available to remove cladding on publicly and privately-owned flats.

To comply with the government’s building safety guidelines, banks are asking for fire safety certificates on high rise flats with cladding.

But some high rise homeowners that do not have cladding are being asked to provide evidence their building does not pose a fire risk, as nervous lenders and valuers scramble to get to grips with the new rules.

Brokers are reporting cases of nil valuations and applications being rejected for mortgages or remortgages because of the time taken to obtain certificates that deem the property safe.

Nick Morrey, product technical manager at John Charcol, said: “Cladding is still an ongoing issue and I’m not sure how far £1bn will go. Every property that has some form of cladding is having the same problem. There just aren’t enough inspectors to sign off the certificates lenders are asking for.”

So how can mortgage brokers help clients who are buying or remortgaging a high rise flat?


Contact the building manager

As soon as you receive an application from a client that involves a flat of any description, ask the borrower or the vendor if there is cladding.

If they say yes, the building manager needs to supply a fire safety certificate or an EWS1 form. Cladding is not always easy to spot, so unless it is certain there is no cladding, check with the building manager.

If an inspection has not been carried out and a certificate is not available, ask the building manager when this will be done or if there is a schedule of work available that can be given to the lender.

If your client is remortgaging they should talk to all the other leaseholders in the block to persuade the management company to start the process as soon as possible.


Get the right certificate

If there is a certificate, check it is acceptable. It has to be signed off by an expert who belongs to one of the professional bodies approved by the Ministry of Housing Communities and Local Government. (*see list below)

Many lenders have contacted brokers to outline their lending policy on high rise flats with ACM cladding or other types of unsafe material.

The standard response from lenders is to ask for a written statement to confirm that the cladding system for the property, both ACM and non-ACM, meets all current legislative requirements and guidance set out by the government.

The best way to satisfy the lender’s requirements is to obtain a completed EWS1 form.

EWS stands for external wall systems. This is the standardised form developed by Barclays and RICS and has fields for all the information valuers and lenders require to help them make a decision on whether to lend.

The certificate must be on headed paper, with the full property address and all postcodes covered by the development. It must be dated and signed, with the name of the expert printed along with their qualification.

Morrey said: “Don’t expect lenders to accept any old documentation, or one that has not been signed or properly accredited. Lenders and valuers have to adhere to strict guidelines on this.

“Once brokers have the document they should show it to the valuer as soon as possible, preferably before the valuation has been carried out.

“Ask the valuer if this form will be acceptable to them and the lender in question.”


Six to 12 months waiting time

If the form does not exist then all brokers can do is get their clients to contact the management company or galvanise the other leaseholders into action to exert pressure on the company.

Leaseholders are being told it can take between six to 12 month to obtain a fire safety certificate which may mean they have to put their purchase or remortgage on hold until the certificate is available.

Some mortgage lenders are offering product transfers to borrowers who have become mortgage prisoners because of the new rules.


*The professional bodies approved by the Ministry of Housing Communities and Local Government are:

Architects Registration Board (ARB)
Association of Consultant Approved Inspectors (ACAI)
Association for Project Management (APM)
Association for Project Safety (APS)
Chartered Association of Building Engineers (CABE)
Chartered Institute of Architectural Technologists (CIAT)
Chartered Institute of Building (CIOB)
Chartered Institute of Ecology and Environmental Management (CIEEM)
Chartered Institution of Building Services Engineers (CIBSE)
Chartered Institution of Water and Environmental Management (CIWEM)
Construction Industry Council Approver Inspectors Register (CICAIR)
Institute of Clerks of Works and Construction Inspectorate (ICWCI)
Institute of Environmental Management & Assessment (IEMA)
Institution of Civil Engineers (ICE) Institution of Fire Engineers (IFE)
Institution of Structural Engineers (Instructed)
Local Authority Building Control (LABC)
Royal Institute of British Architects (RIBA)
Royal Institution of Chartered Surveyors (RICS)
Royal Town Planning Institute (RTPI) Society of Façade Engineers (SFE)


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