Can You Get a Mortgage on a Flat with Cladding?

Since the tragedy of Grenfell where 72 residents lost their lives, much has been reported about the unsafe cladding materials used in the construction of flats and other high-rise buildings. Naturally, due to safety concerns, many owners of flats in similar buildings wanted out. They no longer wanted to live in a flat that could potentially be posing a significant risk to their lives. They just couldn’t sell as nobody was willing to offer a buyer a mortgage.

Luckily, albeit too late, the government acted to remedy this by putting plans in place to begin removing the dangerous cladding and ensuring residents do not bear the cost. This would not only make the flats safe but also help make it possible for them to be sold.

The Cladding Safety Scheme (formally the Medium Rise Scheme) will meet the cost of addressing life safety fire risks associated with cladding on residential buildings over 11m in height, or 11-18m in height in London.

In Jan 2023, it was also announced that lenders were open to agreeing to mortgages on flats with cladding. This was somewhat of a breakthrough as now you could get a mortgage on a flat with cladding, but it comes with some caveats. In this blog, we’ll take a look.

What is cladding and why is it a problem?

Cladding is like the skin that wraps around a building. It offers a protective layer to the exterior of the building, helping it to improve energy efficiency and in some respects give it a more uniform look. However, cladding is susceptible to damage when exposed to heat or other extremes, as unfortunately proven during the Grenfell disaster. This led to the creation of the Building Safety Act 2022 which states qualifying leaseholders could have their cladding removed or replaced at no charge.

So, whilst there are plans in place to remove the cladding, progress has been slow with many residents still awaiting a change to their building.

Are there mortgages for flats with cladding?

There are, but in limited number. Not all lenders are willing to provide mortgages for flats with cladding. However, since January 2023, six lenders have followed guidance from RICS (Royal Institute of Chartered Surveyors) where they will help valuers assess properties with cladding and therefore enable lending on the properties.

Certain rules apply regarding these mortgages, and we will cover those a little further down the page.

Which banks offer mortgages for flats with cladding?

At present, six lenders have said they are willing to lend for the purchase or remortgaging of a flat with cladding. They are:

• NatWest
• Santander
• HSBC
• Lloyds
• Barclays
• Nationwide

Each one will have rules to follow, and each may vary significantly from the other. However, for each lender, you will need to provide specific evidence that is the same regardless of you who apply for a mortgage with. This is in addition to the standard documentation you would have to provide in any other mortgage application.

What are the criteria to be accepted for a mortgage with these lenders?

Flats with cladding are seen as a risky investment for lenders so they put in place strict criteria before accepting your application. They will want to know that measures have either been taken or are being taken concerning removing the cladding from the property.

This will come in the form of evidence that supports:

• Your building is being fixed by the developer under what is known as self-remediation.
• You are covered by an approved Govt scheme such as the Cladding Safety Scheme.
• You are covered by leaseholder protections from the Building Safety Act.

In some cases, an EWS1 may be required although where one of the above can be backed up with evidence, it is often not needed. The EWS1 was introduced after the Grenfell tragedy and acts as a certificate for the building and has been frequently required by lenders however, this seems to be changing making for a much smoother application process.

Does each lender have its own policy for mortgages for flats with cladding?

Yes. Whilst you’ll need to provide proof as indicated above, each lender may also only consider you if certain other requirements are met.

At the time of writing, the lender's policies for mortgages for flats with cladding are as follows:

NatWest: Will offer mortgages on flats with cladding but only where they have an A3 or B2 rating in the EWS1 assessment.

Santander: Will consider offering mortgages on flats in buildings regardless of the building’s height or whether the remediation work has started.

HSBC:  Will consider lending for flats with cladding which have failed an EWS1 assessment.

Lloyds: Will offer mortgages on flats with cladding and no longer require an EWS1 form for properties in England over five stories high.

Barclays: Open to lending on affected properties where a recognised remediation scheme is in place.

Nationwide: Will offer mortgages on flats with cladding where the property is covered by a govt or development scheme.

Will a mortgage on a flat with cladding have higher interest rates?

You may think with the property being considered more of a risk that lenders may add higher rates to the loan but it’s not the case. In fact, all six lenders have said rates would be the same as if on a standard property. It is worth remembering though that with just six lenders to pick from, there could well be cheaper mortgage deals out there, they just unfortunately won’t apply to you. This could mean that over the long term, you pay much more than you would if you had borrowed from elsewhere.

Now that mortgages are available with flats for cladding, it gives those selling an opportunity to finally sell after years of being in effect, a prisoner within their own home. It gives those buying the chance to finally secure the flat they wanted, safe in the knowledge the problems are either rectified or are in the process of being rectified.

Should you own a flat with cladding and have struggled to sell, why not speak to us? Operating as cash house buyers, we can make you an offer and have the property sold in as little as seven days, regardless of its condition or location. We can help you sell your flat fast, removing you from the stress and worry that a sale will never come. What’s more, we do it for free, We cover your legal costs, allowing you to sell your home for free, with no surprise charges or hidden fees. Contact our team today to find out more.