Government’s low-cost loans for cladding removal need careful scrutiny

Darren Cox - Colour

Expert property lawyer, Darren Cox of Thursfields Solicitors has highlighted a potential problem with the government’s new plans to finance the removal of unsafe cladding on blocks of flats.

Darren was commenting after Housing Secretary Robert Jenrick announced that flammable materials will be removed from buildings over 18m high “at no cost to residents”, but that those at lower levels will be offered loans to make their homes safe.

The government intervention comes in the wake of the 2017 Grenfell disaster, where many tower blocks were found to be unsafe, resulting in flat-owners facing huge bills for fire-safety improvements.

Darren, an associate solicitor in the Residential Property department at Thursfields, explained that the government’s new investment of £3.5bn would come on top of £1.6bn in funding that was announced to remove unsafe cladding last year.

He said: “The government’s plans have only received a cautious welcome from the housing sector because the no-cost funding available depends on whether blocks of flats are higher or lower than 18 metres.

“For blocks higher than 18 metres, the promise to replace cladding at no cost to the leaseholders will help hundreds of thousands of homeowners, who will eventually be able to buy and sell their properties again. That’s great news.

“However, for blocks lower than 18 metres it’s not as positive – with the government planning long-term, low-interest financing to fund the work, with full details of how this scheme will work yet to be revealed.”

Darren said that many people were questioning the fairness of differentiating on tower block heights, and that the government had responded by citing expert evidence of a greater risk of death or serious injury in fires in taller buildings.

The government had also pointed out that the maximum monthly loan repayment for any leaseholder will be £50 a month, and the finance will be attached to the property, not the person.

He said: “This is where the detail needs to be scrutinised. For example, a mortgage attaches to the property, and part of the conveyancing process entails ensuring that the seller’s mortgage is repaid and removed before the buyer purchases. 

“With that principle in mind, there needs to be more detail about the cladding finance and how that will work. Is the loan fully repaid upon sale of the property and can the seller afford that? 

“If not, and the loan remains attached to the property, will a buyer be comfortable with taking that on?  And will a lender be happy? 

“And if the borrower was to default on the mortgage, which loan would take priority for repayment first – the mortgage or the cladding finance?”

Darren added: “As is often the case when such huge government plans are announced, the real devil will be in the detail.”

Darren Cox - Colour

Darren Cox,

Regional Team Leader - Black Country & Wyre Forest. Associate Solicitor, Residential Conveyancing

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