Experts Say Measures Help Some But Not Others, Point To Long-Term Economic Damage For Leaseholders
£3.5bn in funding has been promised by the Government to remove unsafe cladding from some high-rise buildings, drawing mixed responses from experts.
Housing Secretary Robert Jenrick announced £3.5bn of funding for high-rise buildings over six storeys high to remove unsafe cladding, and leaseholders of these buildings would face no additional cost to these works.
In a blow to those in smaller high-rise buildings, the Housing Secretary announced low-interest loans would be offered to leaseholders so they can replace unsafe cladding – capping the monthly cost at £50.
A new levy on developers of future high-rise buildings to cover the cost of the grants, plus a separate tax on residential property development in the UK from next year were also announced in a bid to remedy the sector’s failings in creating safe residential buildings.
Leading national law firm Irwin Mitchell’s residential property experts say the proposals only go so far, pointing out the long-term economic impact on those leaseholders suffering from a lack of support.
Expert Opinion“The most accurate statement made by Secretary of State Robert Jenrick during today’s session on cladding was that “this is not a simple challenge to fix”.
“Those in buildings below 18m will no doubt feel a sense of injustice and it is to be hoped in the forthcoming months a pragmatic approach will evolve between the RICS, insurance companies and the lenders, with strong backing from the Government.
“In the meantime, leaseholders are being bankrupted, transactions and transaction chains are stalling and others are unable even to dream of escaping their unsafe homes. It is hard not to conclude that the real effect on the value of homes and the prospect of a two-tier market will take many more years to become clear and that wait will be destructive in relation to peoples’ lives and financial security.
“A £50 per month cap will go down very differently in different parts of the country, as will loans sitting with buildings long term, albeit if they have actually been made safe, the context will be hugely different.
“While the cause of the current situation is complex, it clearly involves a massive regulatory failure. All agree that it is one of government’s primary functions to keep the population safe in their homes.
“Additional initiatives regarding the new Ombudsman, Fire and Building Safety Bills and the Waking Watch Fund need to be seriously backed up by further measures and a radical overhaul of regulatory compliance as quickly as possible. Time has been lost and it is not acceptable for lives to remain on hold for longer than they already have.” Jeremy Raj - Partner
Hundreds of thousands of leaseholders have been affected by unsafe cladding since the Grenfell disaster in 2017, which killed 72 people and exposed how flammable, unsafe cladding was present in many high-rise buildings across the UK.
Since then leaseholders have been saddled with huge bills to bring in safety improvements for their buildings – of which they had no part of causing. Some have reported ‘waking watches’ costing more than their monthly mortgage payments.
Lenders have also been reluctant to provide mortgages for flats affected by the cladding crisis, rendering thousands of apartments across the UK as worthless until the situation was remedied.
Jeremy continued: “While many commentators, opposition MPs, leaseholders and others are looking for an easily-identifiable villain to blame, those of us within the industry have long realised that is not a viable or realistic prospect.
Housebuilding is a complex endeavour involving many different professions, and the failings have been multi-faceted. Establishing and correctly apportioning liability will be hugely complex and other than some general statements, the Government does not appear to have given a clear steer on how that is to unfold.
“However, depending on which side of the political divide one sits, today’s promise of additional funding, a new tax and levy constitute an unprecedented and generous intervention that focuses on the area of greatest danger; or yet another failure to protect the innocent that goes nowhere near far enough, addresses only a narrow part of the problem, continues the ‘first come first served’ approach and raises more questions regarding the detail of what has been announced than it answers.”