Government announces leaseholders will not pay to remove unsafe cladding

The Government announced on 10 January 2022 that no leaseholder living in their own flat would have to pay to fix unsafe cladding, and that it will pay for the removal of unsafe cladding in buildings over 11 metres¹. The Building Societies Association (BSA), which published a consumer question and answer page on the issue on 5 February 2022, confirmed the date of the announcement¹.

The BSA set out what the announcement does and does not cover. Work completed before the announcement will not be covered retrospectively, so leaseholders who have already contributed to remediation cannot claim that money back under the scheme¹. The Government has written to the residential property developer industry asking it to contribute to a fund which would protect leaseholders from the cost of removing cladding¹. The BSA said it was waiting for further details from the Government on support for those in lower-rise buildings under 11 metres¹.

Separately, in a letter to lenders on 12 January 2022, the Government confirmed that issues of building safety could be considered as exceptional circumstances for shared ownership flats requiring a consent to let¹. Decisions on whether to grant consent to sub-let a mortgage flat potentially affected by unsafe cladding remain with individual lenders, based on their own risk appetite¹.

The BSA also explained the role of the EWS1 form, a cross-industry initiative from the BSA, the Royal Institution of Chartered Surveyors (RICS) and UK Finance to enable a fire safety assessment on properties clad with potentially combustible materials¹. It was designed for mortgage valuation purposes, in line with government guidance, to give surveyors the information needed to assess the value of flats and help lenders lend¹. Many lenders have implemented RICS guidance, which has resulted in an EWS1 not being required for 92% of mortgage valuations on flats¹.

The BSA noted that expert advice published on 21 July 2021 states there are no systemic fire risks in properties under 18 metres, but that RICS guidance does not reflect this advice and lenders may still request an EWS1 for some properties under 18 metres to support lending decisions¹. Buildings with neither cladding nor a combustible timber balcony do not, and have never, required an EWS1, though some buildings that look brick or stone built have a brick or stone slip external wall system that constitutes cladding¹. A valuer's decision not to require an EWS1 is no guarantee that fire safety remediation works will not be required in future¹.

Why it matters for households

Leaseholders who live in their own flat in a building over 11 metres are covered by the 10 January 2022 announcement, so the cost of removing unsafe cladding in those blocks falls to the Government rather than to them¹. Those who paid for work completed before that date are not covered retrospectively¹. Households in buildings under 11 metres are not covered by the funding commitment as described, and the BSA said details of support for them had not yet been published¹.

For mortgage holders, the BSA said anyone in a flat affected by the cladding issue whose fixed rate deal is ending can re-mortgage with their current lender, provided they are not borrowing more than their current mortgage and their repayments are up to date, whether or not an EWS1 is available¹. Borrowers should not have to move onto their lender's standard variable rate¹. Switching lender or taking a further advance may be difficult, as these are treated as new loans and require a valuation that could trigger a need for an EWS assessment¹.

What happens next

The BSA said it was waiting for further details from the Government on support for those in lower-rise buildings under 11 metres¹. The Government has written to the residential property developer industry asking it to contribute to a fund protecting leaseholders from cladding removal costs¹. No further dates have been reported.