The statement from Robert Jenrick follows advice from fire safety experts in a review that was commissioned by the government earlier this year.
The review found there was no systemic risk of fire in medium and low rise-buildings.
It said fire risks should be managed where possible through measures such as alarm systems or sprinklers but analysis showed the majority of buildings under 18 metres did not require expensive remediation.
It found there was a downward trend in the number of residential fires in England, with 91 per cent taking place in houses, bungalows, converted or low-rise flats, while blocks of flats of four storeys or more accounted for nine per cent of incidences.
HSBC, Barclays and Lloyds Banking Group are among the banks expected to amend their practices in line with the new advice.
The Responsible Person for all blocks of flats will continue to have a legal duty to ensure properties have an updated fire risk assessment to identify issues and the need for remediation. This will include the installation of sprinklers, alarms and in extreme cases, the removal of flammable materials.
To help with this, new guidance for the risk assessment of external wall systems will be introduced. The PAS9980 fire risk assessment will ensure inspections are proportionate to risk and actions are cost-effective. The Consolidated Advice Note which was published in January last year will be withdrawn.
For buildings under 18m which do require remediation, the government will still offer a financing scheme which will see leaseholders pay no more than £50 a month to replace unsafe cladding. Details of the scheme are expected to be announced soon.
Developers to pay for historic defects
The government has also set out plans for developers of high-rises in England to contribute to the cost of remediating these buildings.
A consultation published today said a levy will be applied when developers seek permission to build certain high-rise residential buildings of 18 metres or more in height.
The money generated will contribute towards fixing historic fire safety defects, including unsafe cladding. The government said this would protect leaseholders and taxpayers from taking on the burden of costs.
The government is calling for views on the proposed design of the levy, which was first announced earlier this year.
It has also been confirmed that the Building Safety Fund will reopen for applications in autumn for any eligible buildings that missed the original deadline in June.
Jenrick said: “Today’s announcement is a significant step forward for leaseholders in medium and lower-rise buildings who have faced difficulty in selling, anxiety at the potential cost of remediation and concern at the safety of their homes.
“While we are strengthening the overall regulatory system, leaseholders cannot remain stuck in homes they cannot sell because of excessive industry caution, nor should they feel that they are living in homes that are unsafe, when the evidence demonstrates otherwise.”
He added: “That’s why I commissioned an expert group to further examine the issue, and have already agreed with many major lenders that lower-rise buildings will no longer need an EWS1 form, and the presumption should be that these homes can be bought and sold as normal.
“We hope that this intervention will help restore balance to the market and provide reassurance for existing and aspiring homeowners alike. The government has made its position very clear and I urge the rest of the market to show leadership and endorse this propionate, evidence based, safety approach.”
In a joint statement, UK Finance and the Building Societies Association, said: “Flats should be safe places to live, so we welcome the government’s expert panel view that there is no systemic risk from fire in medium and lower rise blocks.
“We also welcome the actions the government has outlined today, including the withdrawal of the current Consolidated Advice Note on cladding, and urge them to continue to work with relevant stakeholders to ensure all documents, including the RICS guidance, align with the views of the expert panel.
“Once these changes are made both borrowers and lenders should be in a clearer position and know what is expected of them.”