Because of cladding issues within the block, my leasehold flat is stuck. Due to the possibility of being charged for remediation work, including ‘unsafe and flammable balconies’ as well as missing cavity barriers, I cannot sell.
Can Michael Gove’s latest proposals be of assistance to me? LB
Following the scandal with the cladding, fire safety bills for leaseholders can reach hundreds of thousands of pounds.
MailOnline Property expert Myra Butterworth replies:Leasing holders across the country have found it difficult to deal with cladding issues.
Due to the high cost of fire safety repair costs, many are in danger of going bankrupt. These bills can reach hundreds of thousands of pounds each.
Problem is, the property owners cannot sell it until they have been proven safe. This leaves those who want to move in with their properties and a higher monthly bill.
The recent statements by the Housing Secretary that leaseholders were “trapped” and it was now time for them to be protected and made ‘industry pays’ have been welcomed cautiously by these tenants.
Michael Gove, Secretary of State for Levelling Up, Housing and Communities, made the following announcement: “We will eliminate proposals for loans and long term debt for leaseholders living in medium-rise buildings and guarantee that no tenant will have to pay any penny for dangerous cladding.”
Many of the flat owners are still facing huge bills for interim fire protection costs that can run into the thousands.
Tom Beak (solicitor at Kingsley Napley) replies:It’s possible. But, there may be ‘ifs and ‘buts.
First, Michael Gove did not announce new legislation. He merely indicated his intention to reach out to developers in order to offer them a contribution to the current remediation fund.
Although Mr Gove expects to agree to a fully funded plan by March, it’s not yet clear how or when negotiations will proceed.
A second aspect of the proposed new plans is to pay for the unfunded cost of remediating unsafe cladding on buildings between 11 and 18 meters tall. If your building is within this range, you could be eligible for financial assistance. You must still rely upon pre-existing policies if it exceeds 18 meters.
My fear is that your building will be considered uninsurable if it’s less than eleven metres in height. Currently, no solution is available for buildings less than 11 meters tall that have been declared unsafe. Leaseholders will not be able to rent these buildings.
If you are in this group, however, there is no hope. The new proposals will only encourage lenders to ease their position to lend on these properties.
Your block may be deemed’medium-rise’. The exact eligibility criteria for how the funds will be distributed are still unknown. Although it seems that all leaseholders will be covered, past policies had strict criteria that allowed for the access of funds. It is therefore possible that some buildings that are between 11-18 metres high may not qualify.
Of course, until we know that Mr Gove’s negotiations with developers are successful, there is no guarantee that the proposed remediation fund of £4billion will be available at all.
Additional fire defect, like flammable balconies or missing cavity barriers, and the replacement of fire doors that are faulty, will not be covered
The proposed remediation fund was created to eliminate ‘unsafecladding’.
You may be eligible for assistance to fix cladding defects on your home, but you are also not responsible for fire safety issues such as missing or flammable cavities, fire door failures, and faulty fire doors.
It is consistent with past policies that were criticised for only providing partial solutions to buildings and rendering them ‘half-safe’. Innocent leaseholders pay the rest of the cost to correct safety problems.
The Government’s previous plan for tall buildings between 11 and 18 meters has been scrapped. It consisted of a low-interest, long-term loan to leaseholders. Instead of increasing leaseholder debt, this would ensure that the “polluter” pays.
A new fund was also announced by Gove to pay for alarm system maintenance on buildings still using a watch.
These funds will supplement the Waking Watch Relief Fund. Gove intends to engage with the insurance market to decrease insurance premiums which have rocketed since the safety crisis. He will also issue proportionate guidance to building safety assessments. T
The hope is this will stimulate the market, and alter the prudent approach taken by lenders and buyers – who according to Gove sometimes ‘go beyond’ the necessary. It remains to be determined if this strategy is successful.
While Mr Gove’s latest proposals represent a positive step, there is still much to be done. The proposed remedy fund is a faster solution to the problem than the previous loan program, provided it can be applied quickly and does not have any excessive eligibility requirements.
It is possible that leaseholders may continue to pay the cost of interim safety measures, and will struggle to sell their houses until they are fully realized.
These defects are likely to continue being funded by leaseholders, unless there is a new, more targeted policy or an expansion of the remediation funds to cover fire safety problems beyond cladding.