Mortgage lifeline for homes blighted by fire-risk cladding

CLADDING victims could be guaranteed mortgages in a ‘game-changing’ bid to fix the housing market.

More than one million homeowners have been left unable to sell or remortgage their homes following the Grenfell disaster, which killed 7 people.

Lenders have refused to offer mortgages or mortgage transfers for flats that pose a fire risk – sparking the biggest housing crisis in a generation.

Now it has emerged that Downing Street has held crisis talks with industry leaders in a push to get the market moving again. The summit included bosses of the biggest mortgage lenders, including HSBC, Natwest, Barclays, Nationwide and Lloyds, according to the Financial Times. One of the solutions discussed was for the Government to provide guarantees on mortgages for potentially dangerous flats.

Initially, only tower blocks with the same type of cladding as Grenfell were deemed risky. But last year the Government said buildings of all heights with any cladding should be assessed. It is thought tens of thousands of sales have fallen through as a result.

Ministers have repeatedly criticised lenders for being too cautious, to the annoyance of industry insiders who believe the rules have tied their hands.

Sources say government-backed mortgages could be a compromise, allowing banks to take on the risk of lending against flats with potential issues.

Martin Boyd, chairman of charity Leasehold Knowledge Partnership, said: ‘If the Government is now saying that the sector has overreacted and buildings are safer than everyone thought, then it has a moral duty to help stabilise the market because it caused the sector to panic in the first place.’

A Government spokesman said it continues to urge lenders to take a ‘proportionate approach’ to fire safety risk.