Hodge removes height restriction from lending criteria

Hodge removes height restriction from lending criteria

This will apply to privately built properties in England and is expected to help people purchasing homes in bigger cities such as London, Manchester and Birmingham. 

Applications must be for homes built by one of the 51 developers who have signed the Developer Remediation Contract with the government, or one of the four developers whose schemes are proven to be unaffected by cladding issues. 

Hodge has also invested in its surveying team to manage these applications. 

The lender will also now accept applications for homes in England that are built with modern methods of construction (MMC). These will be subject to a referral to Hodge’s in-house surveyor and head of property risk, Jonathon Matthews. 

Emma Graham (pictured), business development director at Hodge, said: “The enhancements were the latest in a long line of adjustments intended to support brokers who are working harder than ever to support their own customers in the moments that matter. 

“At Hodge, we pride ourselves on being experts across the markets we serve, and property is a big part of this. This is why we’ve decided to take on our own in-house property team to support and review applications at the very beginning of the process, to help save our brokers’ time and hopefully give their customers a quick and easy answer at application.” 

Matthews added: “We understand many professionals getting their foot on the property ladder in some of the UK’s major cities will be looking at property in high rise buildings – and some lenders are reluctant to approve these because of the issues and liability around the cladding of these buildings. 

“We’ve examined the market, looked at the contracts put in place by government around those issues, and now, with our own property experts and surveyors at hand, feel we’re in the right place to lend on properties above the sixth floor. We hope these enhancements will give our intermediary partners the help and expertise they need to get quick lending decisions for their clients.” 

Hanley Economic BS enhances criteria

Hanley Economic BS enhances criteria

The lender said that, following broker feedback, it has extended its credit window for defaults and CCJs from six to three years, which means most credit impairments can be ignored if they are over three years old.

The firm said that cases would still be assessed on an individual basis.

Hanley Economic BS will also accept agency workers and they will be underwritten on the same basis as zero hour contract workers and NHS staff bank.

As part of this, applicants must have been continuously employed for at least 12 months with the same agency and have a contract of employment in place.

Additionally, the mutual can now lend on flats if the property has been built post-January 2020.

David Lownds (pictured), head of products and marketing at Hanley Economic Building Society, said: “In a time when borrowing needs are constantly evolving, it’s vital that we, as a lender, regularly assess where we can implement positive change to better support these needs.

“The pandemic impacted many different people in many different ways and we all appreciate that life events can happen at any given time. As a mutual, we pride ourselves on being able to offer a range of property-related solutions to credit-worthy borrowers – even those with historic issues – in a responsible manner when and where possible.

He continued: “We hope these criteria enhancements will be well received by our intermediary partners as they were formulated on the back of their valued feedback.”

Flats requiring EWS1 for mortgages rises to 4,000 in Q2

Flats requiring EWS1 for mortgages rises to 4,000 in Q2

Data from six mortgage lenders submitted to the Department for Levelling Up, Housing and Communities (DLUHC) found that this equated to 4,000 flats out of the 43,000 that were valued for a mortgage during the period.  

This was up from 3,000 flats which required an EWS1 or equivalent form, out of the 35,000 valued in the three months to March.  

Annually, this was lower than the 5,000 flats where an EWS1 form or its equivalent was requested by lenders, out of 54,000 properties. 

The height of a property was the driving factor for EWS1 requests, as indicated by data covering 30,000 flats across four lenders. 

Some 62 per cent of these flats which required an EWS1 form were seven storeys or higher, while 32 per cent were five to six storeys tall. 

Just two per cent were low-rise properties of one to four storeys and seven per cent were a combination of mid and low-rise buildings. 

Compared to the previous quarter, there was a similar share of low-rise and combination buildings requiring an EWS1 form or equivalent. In Q1 this year, mid-rise properties made up 28 per cent of EWS1 form requests and high-rise buildings accounted for 53 per cent. 

The spread of properties requiring an EWS1 form in Q1 was broadly similar to Q2 last year. 

The mortgage valuations that form this data refer to valuations made as part of a mortgage application for regulated mortgages, buy-to-let mortgages and second home mortgages. 

The DHULC said it was working with lenders to improve the quality of the data and examine the impact of EWS1 forms on mortgage transactions. 

The department said the data covered the majority of the lending market. 

Propertymark calls for ‘clarification and further’ action on leaseholder protections

Propertymark calls for ‘clarification and further’ action on leaseholder protections

In the letter, Nathan Emerson (pictured), Propertymark’s chief executive, said that “leaseholders should never cover the costs for remediation works since we do not see a scenario where they would be responsible for a building safety defect, unless the building is leaseholder owned”.

He said that it understood that buildings over 11 metres in height were “most at risk of structural damage and loss of life in the event of a fire” but that they were not protected, even if there was flammable cladding present in the building.

Emerson added that freeholders were already refusing leaseholder protections based on height or number of storeys of the building.

He added that leaseholders needed further protection beyond 14 February 2022, with some developers reportedly offering extending leases, which would remove leaseholder protections.

When the Building Safety Act came into force last year, to become a qualifying leaseholder a property had to be above 11 metres and on 14 February had to be the main home, and the leaseholder could own no more than three dwellings.

Leaseholders could qualify if the property was bought since 14 February but either of the two points above had to be the case on that date, according to the Leasehold Advisory Service.

“We ask how this is acceptable and in the best interests of leaseholders, when it goes against the fundamental aims of leaseholder protections,” Emerson noted.

He also asked how a programme such as the Building Safety Remediation Scheme “would not represent better value for money for leaseholders and taxpayers”.


‘Ombudsman-style service needed’

Emerson said that it the Building Safety Scheme would cost £100m, which he said was “immensely overinflated”, that would not even be two per cent of the total funding allocated to the Cladding Safety Scheme.

“Leaseholders would also benefit from greater protections, with an Ombudsman-style service where leaseholders have the ability to raise concerns if protections have been illegally taken away, or where legally binding decisions can be enforced to ensure leaseholders do not pay any remediation costs,” he added.

Emerson called for clarification on how the Cladding Safety Scheme would prevent developers from passing remediation costs to leaseholders, what recourse there would be for developers who pass on costs to leaseholders and what plans the DLUHC had on the limitations of the current leaseholder protections.


Government launches biggest cladding removal scheme in bid to fix thousands of buildings

Government launches biggest cladding removal scheme in bid to fix thousands of buildings

The scheme will mean costs associated with removing unsafe cladding in mid-rise buildings will be covered by government funding, which means leaseholders will be protected from costs where a “responsible developer cannot be made to pay”.

All buildings in England over 11 metres will be eligible and high rise buildings over 18 metres outside of London where work has been recommended will be eligible, and it will also be available for social housing.

The government said that thousands more mid-rise buildings will now qualify for funding, helping tens of thousands of residents across England to gain a “pathway to a safe home, with no cost whatsoever to leaseholders in the building”.

The scheme will be funded by £5.1bn allocated by the government and revenue from the Building Safety Levy on new development.

Building owners who believe they are eligible need to apply through the Home s England cladding Safety Scheme application portal and leaseholders or residents who think they ae eligible should offer further information on the building with the Homes England “Tell us” tool.


‘Providing peace of mind and protection’

Peter Denton, chief executive of Homes England, said: “The Cladding Safety Scheme pilot was an important step in removing the cost burden on leaseholders trapped in unsafe homes and built on the progress made on building safety.

“The full rollout of the programme allows us to go even further. Our team is ready to go, and we expect thousands of buildings to benefit over the next decade.

“We will continue to work with Department for Levelling Up to ensure the pace we’re working at is maintained, so we can bring peace of mind and protection to the millions of people whose lives have been affected by unsafe cladding.”

Earlier this year, the Secretary of State for Levelling Up got 49 of the largest housebuilder to sign developer remediation contracts.

Developers have committed to fix unsafe building they developed or refurbished over the 30 years to 5 April.

“While funding is a major part of solving the crisis, it is also important that residents see swift progress once work has been deemed necessary.

“The government has been clear that there is no excuse for unsafe cladding to be left unmanaged. Building owners must meet their legal obligations to fix fire safety defects in their buildings and make homes safe quickly,” it said.

Conveyancers refusing high rise cases over liability fears

Conveyancers refusing high rise cases over liability fears

Mortgage Solutions reported earlier this year that conveyancers were concerned around what they were being asked to do with high rise cases, with legal firms subject to varying requests from different lenders as well as being asked to cover areas for which they were not qualified.

This concern has evidently led to some conveyancers declining cases involving such properties altogether. 

Chris Barry, director of Thomas Legal, said he was aware of several legal firms outright refusing to take on cases involving buildings of above five storeys. 

He explained: “This is because the law firm has to satisfy building eligibility, qualifying leases and work around growing lender requirements. Professional indemnity insurance providers will be asking law firms how many properties they are transacting that are subject to the building safety act upon renewal.”

Barry suggested that a “lack of clarity” around what happens in certain scenarios was also leading to a “wait and see approach” from some legal firms.

We aren’t qualified

Jamie Lennox, director of Dimora Mortgages, said one of his clients had suffered from this recently, with a local law firm stating they would not deal with leasehold properties since they are not qualified to confirm if the property complies with the legislation. 

Hannah Bashford, director of Model Financial Solutions, said her firm had been advised that there were now a host of conveyancing firms who would not take on high-rise cases, as a direct result of concerns around the Building Safety Act, while those that are will charge an extra fee for doing so.

She continued: “My concern with this is twofold: one, conveyancing firms are already stretched so how are they going to deliver decent service levels and not delay remortgages and purchases? 

“And two, as an adviser it is going to become more difficult to recommend a remortgage over a product transfer as once you add in a further charge for this work it may be cheaper for them to simply product transfer.” 

Struggling to meet demand

A host of local law firms were refusing to take on all sorts of new cases, and not just those with cladding issues, said Justin Moy, managing director of EHF Mortgages.

He explained: “Many firms are struggling to recruit sufficient conveyancers to keep up with even a muted level of enquiries, so we are utilising a number of trusted solicitors and conveyancer firms to help our clients with both remortgages and purchases.”

Scott Taylor-Barr, financial adviser at Carl Summers Financial Services, said that conveyancers feel uncomfortable at the way they have been made responsible for establishing compliance.

“It is not their area of expertise and many feel the surveyors and lenders have sidestepped making the decision and simply passed it ‘down the line’, in this case right into the lap of conveyancers who are left to explain to the customer the whole sorry mess. 

“I’m not at all surprised to hear of some conveyancers turning this sort of work away, or charging a higher fee for the extra risk they are then carrying by doing it.” 

Last month, the Conveyancing Association launched new guidance for conveyancers taking on cases with high rise properties.

WhenFresh more than doubles cladding dataset to cover over one million properties

WhenFresh more than doubles cladding dataset to cover over one million properties

The company launched the initial dataset in February and involves remote inspection tools and data sources such as satellite imagery, drone footage, building and planning records.

In addition, there were physical surveys and other input, which was then scrutinised by a group of over 600 Royal Institution of Chartered Surveyors (RICS) qualified surveyors.

At the time, the dataset contained property-level cladding data for 485,234 properties within tall multi-dwelling units at 18 metres or higher in height.

This dataset has been expanded to include 1,122,004 dwellings, and includes multi-dwelling units of less than 18 metres and those between 11 and 18 metres.

WhenFresh reiterated that it was a live dataset and there were monthly updates from the continuing programme of property inspections from RICS-qualified surveyors.

The properties are characterised in three categories. Green is if the building has no cladding, amber is if the building potentially has cladding and merits an EWS1 inspection and red if the building has cladding.

Since the launch of the dataset, 40,047 dwellings have been updated from amber to green status, 23,933 have been moved from amber to red and 10,019 have shifted from red to green status.

Mark Cunningham, WhenFresh CEO and co-founder, said: “We expected the original cladding dataset launch to be well received, but we’ve been staggered by the level of interest from mortgage lenders, insurers, reinsurers, and other parties.

“We’re therefore fully confident that the investments made in expanding the reach, breadth, and depth of the dataset as it continues to evolve will bring significant further benefits and risk insights for those who need to properly understand property cladding risk.”

Gove warns cladding investors of ‘severe consequences’ if remediation deal not reached

Gove warns cladding investors of ‘severe consequences’ if remediation deal not reached

Shareholders who received letters include Blackrock, Vanguard, and Fidelity Management and Research, as well as investors like Norges Bank.

The letter warned that if the manufacturers do not come forward with a “comprehensive financial package” then the focus of the DLUHC would be placed upon them and the consequences would be severe.

This would include ramifications on shareholders’ reputations and their financial stake if the DLUHC is forced to use “legal and commercial tools available” to ensure cladding companies become “extremely uncomfortable”.

Gove said: “I have always been clear that those responsible for the building safety crisis must pay. But despite the fact that their products continue to put lives at risk, some cladding firms have no intention of doing what’s right and addressing their moral and financial obligations to innocent residents.

“Today, we ask responsible investors to use their influence to encourage these companies to come forward immediately with a comprehensive financial package for remediation work. It cannot be right that cladding companies continue to profit whilst so many innocent, hardworking people face financial hardship and misery.”

He added: “To those cladding companies who fail to do the right thing: you will face severe consequences and I will use all commercial and legal tools available to me to ensure you take responsibility.”


No financial contributions from manufacturers

The DLUHC said that to date the three construction product manufacturers had not made any financial contributions to fixing buildings and evidence showed that they had sold flammable products that were inappropriate for end use, mis-selling of construction products though inaccurate manufacturing information and misappropriating safety test results so high-risk products continued to be sold.

Gove has also written to the bosses of the three companies last month calling for action, with Kingspan saying that it would be willing to pay remediation costs but not committing to any new remediation funding.

The DLUHC reiterated that there 46 signatories on the landmark developer remediation contracts, which mandates that buildings over 11 metres need to be remediated if they had a role in developing or refurbishing them.

The department’s recovery strategy unit has also ramped up litigation against irresponsible freeholders who do not remediate building they are responsible for.

High-rise lending still hindered by fresh certificate obstacle, conveyancers warn

High-rise lending still hindered by fresh certificate obstacle, conveyancers warn

In January, UK Finance announced that Barclays Bank, HSBC, Lloyds Banking Group, Nationwide Building Society, Natwest, and Santander had agreed to consider mortgage applications against properties in high-rise buildings. 

This would require evidence that buildings will be brought up to fire safety standards by developers, are covered by a recognised government scheme or by the applicant showing a property is protected to Building Safety Act standards and proving it with a Leaseholder Deed of Certificate. 

The Building Safety Act states that for leaseholders to confirm that they are protected from paying remediation costs for historical non-cladding safety works, they need a certificate that shows they were the leaseholder of that property as of 14 February 2022. 

A spokesperson for UK Finance said: “The certificates are a way to demonstrate whether leaseholders are protected from paying costs. Lenders have their own policies on whether they require a leaseholder certificate to be checked and can update their instructions to solicitors on this via the Lenders Handbook.” 

However, conveyancers say only some banks are asking for this information and each lender is asking for different proof of where the cost liability lies. 


Conveyancers shoulder the burden

Simon Law, licensed conveyancer and chairperson of the Society of Licensed Conveyancers, said this was a “big issue” and down to lenders’ interpretation of the Building Safety Act and individual risk. 

He said putting the responsibility on conveyancers to collect and verify these documents is causing problems as they were “not qualified” to confirm a property’s ownership. 

He said: “We can’t just take their word for it. We also have to check that the developer is a qualifying landlord.” 

Law said the structure of some companies made this harder, a view backed up by Zahrah Aullybocus, consultant solicitor at Nexa. 

Aullybocus said some developers sold properties under a different name or special purchase vehicle (SPV). Once all properties are sold, the parent company moves money out of the SPV then liquidates it. 

“So, there’s no company, no one to hold accountable,” she added. She also said lenders were “passing the buck to us conveyancers”. 

Beth Rudolf, director of delivery at the Conveyancer’s Association, said this made it hard to advise clients because conveyancers and surveyors cannot say if buildings are structurally sound and compliant with the law. She said lenders were “stuck in the middle” because they wanted someone to say whether a property was okay to lend on or not. 

According to the UK Finance Mortgage Lender’s Handbook, some of the information requested by both Barclays and Nationwide includes making sure the property was the leaseholder’s only or principal dwelling as of 14 February 2022, the price and date the property was last sold on the open market and to verify the group net worth of the landlord.


Conveyancers can’t do lenders’ jobs

Law said it felt as though the responsibility for sourcing this information had fallen on conveyancers because of their professional indemnity insurance (PII). 

He said it seemed as though lenders were telling the government they would lend but asking conveyancers to do their underwriting. Law said it was hard to say a property was safe to lend on as this fell outside conveyancers’ remit. 

“It’s not a legal problem we’re looking at here, it’s a building management safety and valuation issue,” Law added. 

Aullybocus said conveyancers were also worried about the validity of the information although lenders are asking them to make sure it is “true and correct”. She said misinformation and errors could lead to leasehold and landlord certificates being incorrectly filled in. 


Trouble getting documents

Aullybocus said some landlords did not want to provide a certificate because works had already been completed, and some leaseholders did not want the document for fear that they would discover they were liable for costs. 

She advised a client to get the document anyway, adding: “I am advising clients to produce Leaseholder Deeds of Certificates if they were owner occupiers as at 14 February 2022 to establish the leaseholder protection provisions under the act.” 

Law said it was a complex issue that not many would be aware of and landlords were not issuing certificates quickly. 

“These are found out through the course of the transaction. You could be adding weeks to an already elongated process at a time when the market is a bit fragile. Things could be extended another four weeks on top of transaction times,” he added. 

Even where lenders do not have this policy, Law said clients should still get the certificate in case things change. 

Law said: “We’re at the mercy of the lenders and their criteria. The act has missed the point a little bit. It was designed to make these properties sellable.” 

Aullybocus added: “Even with the service charges – the way shared ownership works is difficult to unpick and it’s [hard to know] what the charges are because they’re just grouped together.” 


No movement for leaseholders

Law said this put sellers back in “the same position they were in before”. 

He cautioned that if the information on the certificates happened to be wrong, properties would be unsellable. 

Law is telling clients to hold on to records in case of potential sale or remortgage.  

He is also trying to get a meeting with industry bodies to lobby for change, adding: “It feels like it’s going to need more government intervention.” 

Rudolf said this highlighted the need for a property logbook, so the Leaseholder Deed of Certificate could be accessed by future owners, their conveyancer and the estate agent. 

She said a single source of information detailing which buildings were connected to particular landlords would also help, as often, conveyancers were having to source several certificates for the same building due to a lack of information. 

However, she suggested that including a Unique Property Reference Number (UPRN) to building safety assessments could help identify the  landlords attached to several properties. 

Rudolf added: “From there, the conveyancer will need to also see if the Leaseholder Deed of Certificate has been provided for the building but if the lease administrator has changed, without it being registered anywhere, it is possible that it will have been lost. This all creates extra work.”   

The inclusion of this information is also being considered by the Home Buyer and Sellers Group as part of its Property Logbooks which hope to capture the UPRNS for each property. 


Conveyancers turning away leasehold

Conveyancers said firms were starting to refuse leasehold cases altogether. 

Aullybocus said: “A lot of conveyancers are saying they’re basically going to turn down leasehold work. Some of us can’t afford to do that because we’re self-employed or run our own businesses.” 

She said this refusal could be unavoidable, however, as it would be inevitable that at least one property in a chain would be under a leasehold contract. 

Still, Aullybocus added: “My colleagues won’t touch leasehold because it’s complicated, they just want an easy life.” 

Rudolf said conveyancers considered it “too complex to advise on until the process has settled in with the lease administrators and landlords”.   

She said: “This could cause problems for buyers and sellers of leasehold properties. It could mean they have limited options and open them up to higher costs charged by the few firms who will do this kind of business that need to take extra PII to cover it.”    

Law said:“There is no guidance for conveyancers whatsoever. We’re having to read the act ourselves and compare it to the instructions we’re getting from lenders. And then we’re trying to make risk-based decisions on that, which is why a number of firms have said ‘we’re just not going to touch it’. 

“I’ve seen some firms saying that they’re going to charge an additional sum to take it on. They may be using that as a deterrent or seeing it as a way to make money, not thinking in the future that they might end up with a lot of claims.” 

Transition to net zero could create ‘new cohort of property prisoners’ – UK Finance

Transition to net zero could create ‘new cohort of property prisoners’ – UK Finance

In a speech at the UK Finance’s annual mortgage lunch today, David Postings, chief executive of UK Finance, said improved fire safety regulations had impacted the market for flats, with new stands and retrospection making people “extremely concerned about the value, saleability and mortgageability of their property”.

Postings added that it was important to “avoid the same thing” occurring as housing stock transitions to net zero.

He reiterated that UK Finance had advocated for tax changes and incentives to encourage the greening of housing stock to “help the most vulnerable to make the transition”.

“I worry that the easy policy option – pushing lenders to go green at a pace that essentially just greens balance sheets and not the housing stock might prove hard to resist optically.

“This approach could have the unintended consequence of either creating energy inefficient properties that are unmortgageable or penalising those homeowners who cannot make the change easily, through the imposition of higher interest rates or local eco-taxes,” he explained.

Postings said both would lead to the “creation of a new cohort of property prisoners”, which he said lenders did not wish to happen.

He urged lenders and the mortgage industry more widely to “remain vigilant and stress the need to provide incentives that promote the feeling of security and inclusivity”.

“The alternative undermines people’s confidence in housing,” Postings added.

Lack of clarity with Consumer Duty could lead to lender caution

Postings said Consumer Duty was a “well-meaning idea” as it prioritised good customer outcomes.

However, he said the industry should be “thoughtful” about its application, noting that the term “good” was not defined and “likely to be in the eye of the beholder at a point in time”.

“For a product like a mortgage, that could be at any time during its life,” Postings added.

He pointed to the choice between a fixed and a variable rate, and said a good outcome was very dependent on timing. He said that in September last year a fixed rate could have been seen as a “prudential hedge” but this could be very different six months later.

“In the absence of clarity lenders are likely to take a cautious approach. That will almost certainly result in fewer people being able to access mortgage products and it will impact people’s sense of security and ability to own their own home or improve the home they already have,” Postings explained.

He added that the “feeling of retrospection” was “most concerning” as people based their decisions on prevailing rules and regulations but these were increasingly changing. Examples include taxing income rather than profit for landlords or the green transition.

“Houses are significant investments for most of us and if people start to believe that they might be caught out later, that will have an impact on their wellbeing,” Postings said.


Lenders will contact over 20 million people in next year to offer financial support

Postings said with rising interest rates, falling house price predictions, large bills and large borrowing “it was inevitable that people feel less secure”.

He said it was “fortunate” so far the labour market had staid buoyant but any changes could further threaten confidence in housing.

Postings said lenders had been proactive in helping customers, making 16.5 million contacts in the past 12 months to highlight support available if they were financially struggling.

He added that it expected make 20.5 million contacts with borrowers in the next 12 months.

Postings noted that 3.9 million contacts had been made for customer coming to the end of fixed rate mortgages in the past 12 months and a further 4.4 million were predicted in the next 12 months.

He continued that around 200,000 customers had been offered tailored forbearance support over the same period and two million offers tools to manage their finances.

“We represent an industry that supports nine million families in the UK to own their own home and a further 200,000 buy-to-let landlords provide a home to their tenants.

“We help provide security and in times of strife we try really hard to ensure that security is protected and that mortgage customers can continue to live in their homes,” Postings said.