Six of Britain’s largest banks agreed to provide mortgages on buildings with fire safety flaws, freeing owners trapped in previously unsaleable homes.
Barclays, HSBC, Lloyds, Nationwide, NatWest and Santander will provide loans to flats in clad blocks, provided the properties are entitled to financing to remedy safety concerns.
This is the first time banks have agreed to lend to such properties, and it could mean: thousands of homeowners are now free to sell after years of turmoil.
Thousands of apartment owners have been trapped in dangerous high-rise blocks and have been unable to sell since the Grenfell tragedy in 2017, as lenders deemed the buildings too risky to lend on. Leaseholders had to deal with bills of tens of thousands of pounds each to solve the defects earlier the government intervened to require contributions from developers.
UK Finance, the banking trade association, said the six banks and building societies would provide loans to buildings that will be “renovated by developers” or whose repairs will be paid for by a government scheme, covering blocks of more than 11 metres.
Buildings below this height, but affected by cladding, are not covered by the new rules. The government said they would be examined on a case-by-case basis.
Martin Boyd, of the Leasehold Knowledge Partnership, said he hoped the banks’ change of mind would lead to “a major change in credit policy”.
He added: “It is a very welcome step in unlocking the flats market, where sales have plummeted by 60 percent in recent years. The only caveat is that we’ve been here before with pledges from the lenders they’ve stepped down from within weeks.”
Earlier this year, former Leveling Up secretary Michael Gove announced an emergency upholstery fund that will: developers to cover the costs of remediation works more than 11 meters high.
Home builders will collectively pay a minimum of £2bn to solve fire safety problems in their own buildings and will contribute a further £3bn through a tax on new homes. UK Finance said this had helped eliminate “financial risk” for leaseholders and lenders.
Leveling secretary Greg Clark said he hoped the move by banks would leave homeowners trapped upholstery scandal to ‘go on with their lives’.
He added: “This needs to be translated into action now, and I expect the industry, especially lenders and appraisers, to work with us quickly to deliver on these promises.”