This statement is specific to properties in England or otherwise covered by the regime in the Building Safety Act 2022.
In light of the Building Safety Act, mortgage lenders and The Royal Institution of Chartered Surveyors (RICS) are issuing the following statement to clarify the current lending position for buildings impacted by building safety concerns.
The lending and valuation industries welcome the work the Government has undertaken to ensure that leaseholders in properties impacted by cladding and building safety issues will be protected from the costs of remediation. The introduction of the developer self-remediation scheme, Government’s plans to re-open the Building Safety Fund and a new remediation scheme for buildings between 11-18 metres will help to remove the financial risk to leaseholders in blocks of flats 11 metres and above. We also recognise that the costs for remediating non-cladding defects is capped in law for qualifying leaseholders.
We welcome the Government’s agreement to make available, as permitted, details of the buildings included in these schemes for use by sectors and key participants in the home purchase process, ensuring transparency for all.
Alongside this, providing the mortgage application meets individual lenders’ policy and regulatory requirements, lenders will lend on buildings that will be self-remediated by developers or captured under a recognised government scheme or there is evidence of a qualifying lease certificate. *
Anyone purchasing a flat that is eligible for remediation under one of the above schemes is advised to talk to their estate agent and conveyancer in the first instance.
RICS agrees that the Building Safety Act has played a critical role in unlocking the lending market regarding properties with cladding and this will create a vehicle to allow valuations on all blocks of flats as identified above.
A transparent approach to valuing properties with building safety defects is instrumental in underpinning confidence of lenders and purchasers. RICS will continue to safeguard housing market stability for buildings 11 metres and above, and support valuers to take a consistent valuation approach, to help facilitate lending. This will be reflected in forthcoming RICS guidance which ensures valuers take a consistent approach to advising their lender clients.
This statement builds on the 31 March 2022 public joint statement which can be found here .
Lenders and RICS will continue to work with government and key industry stakeholders to develop processes which support the customer journey for lending on flats.
Lenders supporting this statement as at 15 July 2022 are:
Barclays Bank, HSBC, Lloyds Banking Group, Nationwide Building Society, NatWest, Santander
RICS, the Building Societies Association and UK Finance also support this statement.
*Recognised remediation schemes are:
- The Developer Remediation Contracts (11 metres+)
- The Medium Rise Scheme (11-18 metres)
- The Building Safety Fund (18 metres+)