Six of Britain’s biggest banks agreed to offer mortgages on buildings with fire safety defects, freeing owners trapped in previously unsellable homes.
Barclays, HSBC, Lloyds, Nationwide, NatWest and Santander will lend on flats in blocks with cladding, on the condition the properties are entitled to funding to fix safety faults.
This is the first time that banks have agreed to lend on such properties, and it could mean thousands of homeowners are now free to sell up after years of turmoil.
Thousands of flat owners have been trapped in dangerous high rise blocks and unable to sell since the Grenfell tragedy in 2017, because lenders deemed the buildings too risky to lend on. Leaseholders faced bills of tens of thousands of pounds each to fix the defects before the Government intervened to mandate contributions from developers.
UK Finance, the banking trade body, said the six banks and building societies would lend on buildings that will be “remediated by developers” or have repairs paid for by a Government scheme, which covers blocks over 11 metres.
Buildings under this height, but are affected by cladding, are not covered by the new rules. The Government said they would be investigated on a case by case basis.
Martin Boyd, of the Leasehold Knowledge Partnership, said he hoped the change of heart from banks would trigger a “major change in lending policy”.
He added: “It is a very welcome step in unlocking the market for flats which has seen sales collapse by 60pc in recent years. The only caution is that we have been here before with commitments from the lenders which they stepped back from within weeks.”
Earlier this year, former Levelling Up Secretary Michael Gove announced a cladding relief fund which would require developers to cover the cost of remediation works more than 11 metres high.
Housebuilders will collectively pay a minimum of £2bn to fix fire safety problems in their own buildings and will contribute a further £3bn via a tax on new homes. UK Finance said this had helped remove the “financial risk” for leaseholders and lenders.
Levelling Up Secretary Greg Clark said he hoped the move by banks would allow homeowners trapped in the cladding scandal to “move on with their lives”.
He added: “This must now be translated into action, and I expect industry, especially lenders and valuers, to work with us quickly to fulfil these promises.”