Forced sales for some caught in cladding trap
The most important propertyrelated announcement this week came from Housing Secretary Robert Jenrick who pledged an extra £3.5bn to remove unsafe cladding from high rise apartment buildings 18 metres or over with no cost to the leasehold owners of the flats.
However, in apartment blocks between 11 metres and the 18 metre threshold, leaseholders will be left with long-term government loans to pay for cladding replacement. The loan will be attached to each flat so owners will not be responsible for repayments if they sell, the extra monthly charge will pass to their buyer.
Mr Jenrick, who also promised to create a new buildings regulator, says the repayments will amount to “no more than £50 per month and many people will pay less than that.”
The total £5bn cost of the government action on the issue will be recouped via a tax on large-scale residential property developers and on developers of high-rise buildings.
There is no financial provision at all for other fire safety issues in flats, including fire doors, fire breaks and timber balconies. Mr Jenrick says he expects building owners to “step up” and pay for the work, though leaseholders fear this will not happen.
Critics say that the loan scheme for buildings under 18 metres is unfair and breaks a government promise that no innocent leaseholders should have to pay for issues that are not of their making.
There are also deep concerns that until unsafe cladding is replaced and other fire safety issues are tackled, leaseholders will be forced to continue paying hugely inflated service charges due to higher building insurance and the cost of more sophisticated fire alarms or waking watch patrols.
The latest government bid to tackle the cladding scandal has left leaseholders and many MPs angry and disappointed.
Paul Afshar, campaigner for End Our Cladding Scandal, said: “The Government promised us that no leaseholder would have to pay to make their homes safe. We feel betrayed. We were hoping for solutions to stop the sleepless nights and for millions living in buildings less than 18m there has been none.
“Where is the money for missing fire breaks and for fire alarms?”
The government announcement comes as estate agents in Yorkshire report that some desperate leaseholders are being forced to try and sell their flats at a huge loss while hunting for a rare cash buyer. Mortgage lenders will not lend on flats with fire safety issues.
Satty Bhamra of Parklane Properties in Leeds says that higher service charges and insurance costs are one reason for the forced sales. Other leaseholders need to move for work or want to upsize and start and a family.
Satty says: “We are trying to think of ways to make the flats saleable and the obvious is by discounting. That’s why you see one-bedroom flats that should be worth £150,000 reduced to £125,000.”
Vendors are also offering to put between £10,000 and £30,000 in an escrow account for their buyers for a set time in case some of the cost of remediation falls on leaseholders.
Those who buy the blighted apartments are mainly investors, though some owner occupiers are lured by the low prices.
Satty says: “There are some very sad cases of people who need to sell and we are doing our best to help them but, at the moment, they will lose money on the sale.”