The Cladding Scandal; Have High Rise Flats Become Unsellable?

Cladding was once simply viewed as an aesthetically pleasing way to brighten up a building. It was particularly popular for modernising the look of high-rise apartment buildings using timber, aluminium composites or paper/resin composites.

Other than it perhaps marginally improving our view from time to time, most of us had little reason to give any real thought to it.

That changed three years ago when flammable cladding played a huge role in the Grenfell tragedy. The cladding on the Grenfell building was made of an aluminium composite which fuelled the fire and severely compromised the safety of the building’s design.

Reports have since shown that aluminium composites are not the only kind of cladding that would act this way in a fire. There are various types of cladding that do not meet strenuous enough safety standards and, according to the government’s housing committee, 2,000 buildings in England are still cladded with these potentially dangerous materials.

The government have updated building safety regulations in order to try and address this.

What are the new rules?

The laws regarding cladding first changed in 2018 when it was determined that any building over 18 metres tall must pass more stringent fire safety tests. This was updated again in early 2020 and now any building of four storeys or higher is subject to these rules.

The government have set out to more clearly communicate what is expected from property owners in terms of building safety advice. This newly consolidated advice can be accessed on gov.uk.

The guidance includes the view that flammable cladding material made from metal composites should not be on residential buildings of any height.

How might this affect you?

The people who are most significantly affected by these new rules are those who own or live in buildings with external cladding.

We can only imagine how stressful it must be to discover that your home is not as safe as you thought it was. This feeling would be magnified if you didn’t feel the freeholders of the building were doing enough to rectify the situation. It would be completely understandable to want to move out and find somewhere you were more confident would be safe for you and your family.

However, the ongoing cladding scandal has removed this option for many people.

The situation for leaseholder owners

If you own the lease of an apartment in an affected building, you may well feel you have very limited options for moving forward.

  1. You may have found yourself subject to a life-changingly large bill from the building’s freeholders to cover your portion of the costs to remove flammable cladding from the building and replace with an inflammable alternative.
  2. You may have found yourself fighting against frustrating bureaucracy to get the freeholders of your building to take their responsibilities on this matter seriously.
  3. You might have made the decision to sell your apartment and move on… only to find this isn’t quite as straight-forward as you thought.

One of the major impacts of the new safety regulations is that mortgage companies have become very reluctant to lend funds to purchase flats in cladded buildings.

What’s the situation with mortgage companies?

If you did own the leasehold on an affected flat and had decided to sell it, any buyer you found may well find it difficult to get a firm mortgage agreed.

In order for a mortgage company to make a mortgage offer, they would need to be assured that any external cladding on the building met the current safety regulations.

However, many sellers and would-be purchasers have found it near-impossible to get the freeholders of high-rise buildings to share this information. In many cases this is because they don’t have it; largely because the safety tests are so complicated they haven’t been carried out.

In February 2020, it was reported that 500,000 people have been trapped in temporary accommodation or unsellable homes due to confusion over the new guidelines.

Is there anything in place to combat this?

At the end of 2019, the Royal Institution of Chartered Surveyors worked with UK lenders to develop the External Wall System 1 (EWS1). This was intended as an initiative to help remove uncertainty for mortgage companies and break the deadlock many potential sellers and buyers have found themselves stuck in.

This was supported by the government, who included suggestions for EWS checks to be made on all buildings, regardless of height, in their newly consolidated building safety guidance.

The EWS process is designed to address some of the more complicated fire safety checks involving large scale tests for all buildings. With the EWS1 process, a chartered professional with fire safety expertise can perform a more common-sense check on each building and report back to lenders about whether the cladding on a building is safe or whether updates are needed.

Inside Housing have put together a flowchartto explain the EWS process.

Unfortunately, early signs are that the EWS process is not doing a huge amount to satisfy mortgage lenders. Many are seeking further assurances about the safety of external cladding… assurances that in many cases simply cannot be given.

What can you do if you find yourself caught up in this situation?

If you’re a current leaseholder of an apartment in an affected building, or if you’re hoping to become one, you’re likely to find yourself in the middle of a complicated situation.

You might also be caught up in this if you’re involved in the sale or purchase of a cladded residential building of only one or two storeys.

Our suggestion is to take specialised advice on how you might be able to move forward. We are, of course, here to help with this. Please get in touch if you are in need of advice about external cladding and how it might affect the sale or purchase of your home.