Homeowners refused mortgage over misplaced cladding fears

Homeowners have been left unable to switch to cheaper mortgages because banks are demanding proof their properties do not have dangerous cladding – even when they are not covered with material of any kind.

The issue of cladding came into sharp focus after the Grenfell Tower fire in June 2017, which resulted in the deaths of 72 people. The spread of the fire was accelerated because of the highly combustible “Aluminium Composite Material” cladding, on the outside of the building.

The Government subsequently changed fire safety rules to require that all buildings that are 18m or taller (around six floors) have their cladding declared safe. This means properties must be surveyed and granted an “EWS1” certificate by an expert.

However, Telegraph Money has been made aware of cases where banks have rejected mortgage applications because no EWS1 form has been provided, even though the property clearly has no cladding.

In one letter seen by this newspaper, a high street bank refused its customer a new, cheaper mortgage, leaving them paying more than they should on their current deal.

The pool of experts qualified to declare that buildings are safe is small, which has already led to long waiting lists for properties to be signed off. Some surveyors have rejected this work as they are concerned about a

‘Why should homeowners have to pay the price for such a systemic failure?’

potential liability in future should they declare a building safe that later has problems.

UK Finance, the trade body that represents banks, said: “We cannot comment on individual cases. A valuer acting on behalf of a lender should ask the building owner for information about the external wall system where the building appears to comprise – or does comprise – combustible materials to the external wall system or balcony.”

This week, organisations representing homeowners, property managers and freeholders wrote an open letter calling on the Chancellor, Rishi Sunak, to help fully remediate buildings and relieve the logjam. The letter said it was unfair that current owners were forced to foot the bill for surveys and repairs. A government fund has been established to help meet the cost of the work to be carried out, but it will cover only a fraction of properties in the country.

“That funding doesn’t go far enough,” the letter said. “The list of unsafe materials and hidden safety defects that were never identified when these buildings were signed off is growing by the day.”

It added: “Where the costs are not recoverable from the original developer, or through an insurance claim, the burden is falling on those who live in these buildings. Why should homeowners pay the price for such a systemic failure?”