UK Banks Offer Lending on Flats with Cladding: Six Major Institutions Take the Lead

UK Banks Offer Lending on Flats with Cladding Six Major Institutions Take the Lead

In a welcome move, six banks in the UK have started to lend high and medium-rise flats with cladding. This will help lots of people whose properties have been stuck without being able to sell them or to put them as remortgages. The Grenfell Tower fire disaster had a long lasting impact on properties and now banks are starting to lend buildings with claddings of eleven meters or taller. The disaster which happened in 2017 took the lives of seventy two people and is considered as one of the worst events in modern UK. The major banks that will be part of the lending process are HSBC, Lloyds,, NatWest, Barclays, Nationwide Building Society and Santander.

The Royal Institution of Chartered Surveyors has created a proper framework by which the lending process can be made easier and it would also make property valuation much more transparent. The authorities had initiated soon after the tragedy and buildings with the similar structure like that of the Grenfell were excluded from lending. But in January 2020, the government decided that buildings with cladding of any height should be assessed for possible risks. Because of all this furore, the owners were not able to sell or mortgage their properties.
Without the necessary safety certifications, the affected building owners were finding it difficult to make a demand for the property in the market. According to estimates, around 840,000 flats were under the affected list and the owners had to look for temporary fire safety measures like on-site fire monitors that cost tens of thousands of Pounds.

UK Banks Offer Lending on Flats with Cladding Six Major Institutions Take the Lead

In the month of July, a judgment was passed by the London High Court in which a contractor was found liable for the cost of taking out an unsafe cladding from a flat structure. This could possibly lead to serious repercussions for contractors as the total cost of repairing unsafe properties is estimated to exceed 10 billion pounds.

The banking lobby group, UK finance said that this new move will enable lending to restart and create positive waves in the property mortgage and selling. Lee Rowley, the minister of local government and building safety said that the building owners and leaseholders have been stuck too long because of this issue and its high time that lenders instill confidence in them so that the market becomes active.

Rowley also said that the leaseholders are protected under the Building Safety Act. The repairing of the buildings will be a commitment done through remediation schemes of the government and also with the proper cooperation from the developers. One of the major findings of the Grenfell fire disaster was that use of Aluminium claddings contributed to the fire to spread across the tower faster. The grade of Aluminum cladding used in the Grenfell tower is not recommended for building above the height of ten meters whereas the Grenfell tower was sixty meter tall. The tower also lacked basic fire safety measures like fire alarms, sprinklers and a fire exit.

The members of End Our Cladding Scandal Campaign expressed hope in the new development but at the same time they are weary of the kind of assessments that will be deployed to test the safety of the buildings. Giles Grover, co leader of the campaign was doubtful of the rates of the properties and how it will be affected because of the presence of cladding even if steps are taken to remove them. Another aspect is that of the insurance value of the buildings, on which no decision has been taken yet. The government, developers and banks are working in tandem to create a proper lease structure that can help the concerned parties as the issue has been going on for too long.

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Julie Ros
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Julie Ros

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