Lenders have been lending on flats, in some cases not requiring an EWS1 form, however for buildings needing remediation there have been barriers in place to mortgage applications proceeding.
This led to RICS updating its guidance earlier this month and the government has since developed remediation funding schemes and put legal contracts with builders and developers in place to cover some of the remediation costs.
This allows lenders to know the value of a flat and to then lend on the property.
The updated guidance from RICS means that, from 9 January, lenders will be able to consider mortgage applications on property in buildings in England of 11 metres and over in height that are impacted by cladding.
Lenders will need to evidence that building will be “self-remediated” by developers, covered by a recognised government scheme or by leasehold protections in the Building Safety Act.
Recognised government schemes include The Developer Remediation Contracts, The Medium Rise Scheme and The Building Safety Fund.
RICS said that it would continue to support valuers and monitor the impact of new guidance to “ensure it is proportionate, fit for purpose and helps facilitate mortgage lending, while delivering a consistent approach to valuation”.
The lenders’ perspective
Lenders added that they were “committed to ensuring that those who want to buy or remortgage flats affected by building safety issues will be able to access mortgage finance, which will restore confidence in the market”.
“Lenders supporting this statement as of today include Barclays, HSBC, Lloyds Banking Group, Nationwide Building Society, Natwest and Santander.
Lloyds Banking Group confirmed yesterday that it had updated its guidance, so an EWSI form would no longer be needed to progress applications for properties in England that are five stories or higher.
‘Leaseholders can buy and sell with confidence’
RICS, UK Finance and the Building Societies Association also supported this statement.
A UK Finance spokesperson said: “Banks and building societies have been lending on flats, often without requiring an EWS1 form. However, for medium and high-rise buildings in England with cladding and building safety issues, today’s announcement is a significant step to enable lending to recommence.
“This means that lenders can more easily keep the market moving by providing a range of mortgage products for customers seeking to purchase or re-mortgage flats impacted by cladding.
“UK Finance has worked closely with the government, RICS and the BSA to ensure leaseholders can buy and sell with confidence.”
