Hundreds of thousands of homeowners trapped in clad buildings may be able to sell their properties after Britain’s largest mortgage provider scrapped its lending ban.
Lloyds has removed its requirement for apartment blocks five stories or taller to obtain EWS1 certification, a standard practice that has kept some homeowners from obtaining mortgages.
It is understood that the broader industry will announce changes tomorrow to get rid of restrictions on lending for flats with cladding.
Tenants have been trapped for years in homes that have become virtually unsalvageable in the wake of the building safety crisis that followed the 2017 Grenfell fire tragedy.
EWS1 certificates are awarded to high-rise buildings that have undergone an exterior wall fire audit. Without a certain rating in this form, most banks will not offer mortgages, leaving residents unable to sell.
Lloyd’s said it was responding to revised guidance from the Royal Institution of Chartered Surveyors, a trade body, which outlined how to assess the value of properties affected by fire safety issues.
Jas Singh, Chief Consumer Lending Officer at Lloyds Banking Group, said: “While we have continued to lend to properties with cladding where possible, this move will simplify things for home buyers in the estate. [that have] Five or more floors (those above 11m).
“We hope this will continue to open up the market for those living in affected properties, bringing peace of mind to homeowners.”
Fire safety inspections in the aftermath of the Grenfell tragedy revealed failures endemic to blocks of flats, with tens of thousands of blocks requiring extensive repair work to make them safe.
The government has since committed to ensuring that tenants do not pay the cost of the works, which in some cases can be as high as £100,000 for a flat.
The Telegraph understands that other lenders are preparing to grant mortgages on damaged properties at the start of 2023 after major homebuilders sign a contract confirming they will pay to repair buildings for which they are responsible.
Giles Grover, of the End Our Cladding Scandal campaign group, said it was a “positive step” but that “the proof in the candy lies in what’s happening on the ground”.
He said: “We need to get lending back to normal. The difficulty is that there are a number of tenants – known as ‘ineligible’ tenants – who are still being told they will have to pay for repairs, so how will lending work on those properties?”
Grover said those who are excluded from assistance with repair costs include renters who bought their freehold, those who live in buildings less than 11M where work is still required, those with more than three properties, and those who don’t qualify for government assistance.
He added, “They haven’t been helped yet, so it’s still not clear what the valuation situation will be like in those apartments.”
A senior source from a major bank said earlier that it expected within six to 12 weeks to be able to grant mortgages on homes that failed safety assessments but had financing plans for repair work within the first three months of next year. .
Carl Thompson, an economist at the Center for Economics and Business Research, said he expects the changes to boost demand and apartment prices.
Lee Rowley, Minister for Building Safety, said: “The RICS guidance is an important step forward in encouraging lenders to rethink their policy on lending for flats, and I am delighted to see Lloyds change their policy accordingly.
“This is another step forward in giving the industry the confidence it needs to help get the market moving again, supporting both buyers and sellers to get ahead and move up the housing ladder.”
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