UK properties becoming ‘unsellable’ due to unsafe cladding

Next Grenfell disaster looms large: UK properties becoming ‘unsellable’ due to unsafe cladding

2017’s Grenfell disaster highlighted a fundamental flaw in the way our high rise buildings have been constructed and the materials used to build them.

Aluminium composite material (ACM) cladding used in Grenfell Tower was responsible for spreading the fire at an unprecedented rate and because of this all residential high rise buildings are now required to undergo thorough fire safety risk assessments.

Since then, numerous buildings in Manchester have been confirmed to have flammable material in their cladding and insulation and are currently “unsellable”.

Even some buildings without flammable material have still had high risk fire issues found and are required to solve these before the properties can be bought with a mortgage.

This leaves many homeowners in the distressing position of not only living in a building which is a fire risk but also unable to sell their properties or even re-mortgage with a different lender.

What is happening to remove it?

Getting this ACM cladding removed is a lot easier said than done though – and not due to any technical reasons.

Many developers and freeholders either outright refuse to pay for the work, force leaseholders and tenants to front the charge themselves, or deliberately hold up the process.

In the majority of cases, the work isn’t being done.

This leaves most leaseholders not knowing what’s going and often being provided very limited information by their building management companies.

This in turn has caused many property sales fall through and often the last minute because of leaseholder’s limited knowledge on the current fire safety condition of their building.

The issue also isn’t just with mortgage lenders, even cash buyers need to have the exact cost of the cladding works confirmed in order to proceed with a purchase and in most cases this hasn’t been established yet.

Julie Twist of Julie Twist Properties, a Manchester based Estate Agent has felt the effect of this.

In a statement, Julie Twist – managing director – said “Uncertainty around who will fund the work to remove the cladding from affected properties is having a huge effect on the Manchester sales market. Sale fall through rates are much higher than normal and many buildings simply can’t be sold”

“Some developers have done the right thing and offered to pay for the work, but the majority of others have simply refused to acknowledge responsibility, leaving leaseholders feeling incredibly anxious.”

Ground rent scandal

The recent ground rent scandal is also another issue effecting the sales market – where the ground rent that leaseholders pay freeholders doubles over the years to an unaffordable level.

Julie Twist has said: “The number [of unsellable properties] in Manchester is growing daily. We currently have several properties that we are unable to sell, and number of them are as a result of doubling ground rent.”

“The only way to overcome this at the moment is through a vendor applying for a deed of variation to vary the ground rent calculation.

“In very few cases this can be done for a minimal charge, but in most cases will cost vendors in the thousands – it’s simply not viable.”

Deadline dilemma

Julie Twist says there is the issue of the government’s deadline to take into account as well.

Earlier in May, the UK government pledged £200 million towards any necessary work to improve public safety in privately-owned buildings.

However, they set a deadline of three months to claim the funds, with one condition being that freeholders and property owners take “reasonable steps” to recover the costs from those responsible for the cladding.

“Many management companies are being very slow at getting the cladding checked, which could result in the £200 million fund deadline being missed,” Julie Twist said.