The Daily Telegraph - Saturday - Money
Cladding loophole could trap thousands
A change to cladding fire safety guidance could prevent thousands of homeowners from selling, valuers suggest.
The Royal Institution of Chartered Surveyors, a trade body, has overhauled the requirements for external wall safety (EWS1) forms. The Government estimated 492,000 households would now be freed from the tests.
But the guidance is unlikely to overwrite previous failed assessments and may not free as many as hoped.
Homeowners in buildings that no longer require fire safety assessments under the rules could still be trapped in an unmortgageable property if they failed a previous inspection.
A spokesman for Rics said: “A valuer has to take into account all known information when valuing a property. This would include considering any existing EWS1 forms, even if one would not need to be requested under this guidance.”
The notes on the guidance state: “the guidance will not therefore have a retroactive effect for buildings that already have an EWS1 form.” Telegraph Money asked eight of Britain’s largest mortgage lenders if they would now consider a property with a failed EWS1 that no longer required one to be mortgageable, and none said yes.
A Barclays spokesman said: “In the unlikely event that a building has previously received an adverse EWS1 outcome, but would not now require such a form … we would have to act on the basis of the information known to us.”
Tapering the stamp duty holiday could raise house prices across swathes of the Midlands and Yorkshire.
The switch to a £250,000 nil-rate band stamp duty holiday in July will create a new set of hotspots, shifting the main beneficiaries of the tax break into lower-priced markets. In the areas that have the largest savings as a proportion of the local prices, buyers’ purchasing power will significantly increase. This will send demand, and prices, higher.
In the Budget, Chancellor Rishi Sunak extended the tax-free exemption of the first £500,000 on homes in England and Northern Ireland for three months, until June 30. From July 1 to Sept 30, the nil-rate band will fall to £250,000, before returning to the normal rate of £125,000 from Oct 1.
Of the 55 local authorities that will benefit from the highest savings in proportion to house prices during the second phase of the stamp duty holiday, 24 are in the South West, Yorkshire and the Humber, and the Midlands, according to analysis by Hamptons International, the estate agents.
In areas such as Worcester, Rugby, Devon, Swindon and York, savings on stamp duty will be equivalent to 0.7pc of local values – the highest share in the country. This is a contrast to the areas that benefited most from the £500,000 nil-rate band, which were exclusively in London, the South East and the East.
Jake Forrest, of Connells estate agents in Rugby, said the market had become quieter over winter, due to the anticipated end of the tax break. “Then, a few days before the Budget, there were rumours of an extension. The market exploded,” said Mr Forrest. In the week from March 3 to Wednesday, Connells carried out double the number of viewings than in a typical week.
When the £250,000 band is introduced, buyers in more expensive areas will benefit from the maximum saving of £2,500, but will see their bills jump by up to £12,500.
In Rugby, the average house price is £277,070. For the three months from July, it will be one of the areas that benefits most from the £250,000 nil-rate band. The average stamp duty saving between July and October will be £1,850, or 0.7pc of local values.
Many of these new hotpots are also the same places that have seen a surge in buyers as the rise of working from home has brought more demand for larger homes away from urban centres.
In York and Ryedale in North Yorkshire, where average house prices are around £290,000, the respective stamp duty savings with the £250,000 nil-rate band will be £2,030 and £1,890. Both areas have recorded a post-pandemic boom in demand from relocators.
William Butler, of Carter Jonas estate agents in York, said a quarter of buyers are moving from the South seeking a change in lifestyle. “The pandemic accelerated people’s plans to upsize or move out of London.”
Steve Gilleard, of Hunters estate agency in Ryedale, said that the share of relocators purchasing locally had jumped from a third to half since the pandemic began.
Now, there are more homes for them to buy. The extension has brought a rush of property for sale now that cautious sellers feel more confident in the market, said Mr Gilleard. Many are waiting until after the vaccine rollout, he added.
‘There were rumours of an extension – the market exploded’