The government’s most recent announcement about the steps it is taking to address the cladding scandal delivered a positive headline in the form of £3.5bn of extra funding but has ultimately only succeeded in generating more questions and uncertainty.
Within the announcement, the Housing Secretary confirmed that the government will fully fund the cost of replacing unsafe cladding for all leaseholders in residential buildings 18m (six storeys) and over in England.
This is clearly good news – but it begs the question, what now happens to those buildings that are less than 18m and still clad in dangerous materials?
It’s worth remembering that all cladding now considered dangerous has previously passed building regulations, which are standards set by the government. So, it’s not unreasonable that some responsibility for the removal of these materials must surely lie with the government.
The government’s response is:
“Lower-rise buildings, with a lower risk to safety, will gain new protection from the costs of cladding removal with a generous new scheme offered to buildings between 11 and 18 metres. This will pay for cladding removal – where it is needed – through a long-term, low interest, government-backed financing arrangement. Under the scheme, no leaseholder will ever pay more than £50 a month towards the removal of unsafe cladding. This will provide reassurance and security to leaseholders and mortgage providers can be confident that where cladding removal is needed, properties will be worth lending against.”
So, leaseholders living in properties of less than 18m cladded in unsafe materials will be required to pay for the removal of those materials but can do so by accessing a low-interest loan.
The exact interest of this loan has not yet been made available. But even assuming a 0% rate of interest – at a maximum payment of £50 per month on an individual liability that is unlikely to be any less than £20,000 – the loan will take over 33 years to be repaid.
It is unclear whether this liability will sit with an individual or will be attached to the property and so this remains a big question when it comes to the valuation and saleability of all properties that fall into this category. There are also questions now being asked about whether the EWS1 is needed on buildings over 18m.
This is very frustrating. As experts, we are asked to contribute to consultations and committees at the outset of these reviews, but not into the final proposals. The devil is in the detail and the detail never arrives.
As a result, we have now created a two-tier system with more questions than answers. People in buildings above 18m at least now have some confidence for the future, but sub-18m blocks remain shrouded in confusion. How many of those will be looking for ways to extend the height of their property beyond the height at which they receive government support? It’s a crazy situation.
We are working with RICS to reach some clarity on the valuation position on blocks below 18m, but for now, all we have is a two-tier system with more questions than answers.