Take a walk through any major city, and you’ll see high-rise apartment buildings being re-clad. What many prospective home buyers don’t realise is that this work could stop them securing a mortgage.

Following the devastating effects of the Grenfell Tower disaster, the Government introduced new legislation designed to improve the safety of high-rise buildings. The new Building Safety Act, coupled with the 2022 Fire Safety Regulations, puts greater responsibility on building owners and developers to make sure their buildings are safe for occupants.

The regulations are designed to ensure that the building owner or developer takes ownership for rectifying any safety defects and covers the costs without passing them on to leaseholders. But not every high-rise building falls within the legislation, and not every leaseholder can escape having to contribute to remediation costs.

If you’re buying an apartment as a leasehold buyer, it’s important to be aware of the regulations. They’re starting to impact on the conveyancing process as mortgage lenders assess the risk of lending on buildings that require remedial work.

Some mortgage companies have completely stopped lending on properties that fall into this category. Others are taking a more pragmatic approach. This means that the first hurdle when you find an apartment you want to buy is to make sure you can get a mortgage on it.

A good starting point is to ask your conveyancer to review the Leasehold Information Pack, which a seller must provide. The pack contains information about the building, including service charges and other cost implications – such as remediating building safety defects.

This is where the new regulations come in. For a leaseholder to be protected, the lease, the building, and any defects must meet specific criteria. Your conveyancer will be able to advise you further once they’ve reviewed

the Leaseholder Information Pack. It’s advisable for them to do this before you make an offer on an apartment, as it may affect your ability to secure a mortgage on the property.

Once you can secure a mortgage, the next step is to make sure any remediation costs will not be passed on to you by the building owner through service charges. The Landlord Certificate is an important document for your conveyancer to review here. It contains information about the building owner and assets and confirms whether the landlord is responsible for any fire safety defects. It’s also used to calculate how much the landlord can charge leaseholders for remediating the building.

By reviewing the certificate, your conveyancer will be able to see whether you’re at risk of being charged for the remediation of any building safety defects and can advise you on how best to proceed.

If you do find that you are eligible to contribute towards remedial work, there are a couple of routes to explore for financial support. The first is to obtain funding from the original developer who signed the Government contract and has agreed to remediate a building they developed. Some developers have committed to fronting the cost of remedial work to ensure the safety of the high-rise buildings they own. This is mainly the larger national developers so far, but the list is ever-changing.

The second is to apply for financial support from the Government-funded Building Safety Fund (BSF). The fund was set up to help protect leaseholders from the cost of addressing fire safety risks caused by unsafe cladding on high-rise residential buildings.

The scope of the Building Safety Act and 2022 Fire Safety Regulations covers a wide range of scenarios, and the situation is continually evolving as developers and mortgage lenders review their positions. For the most up to date information and guidance, speak to your conveyancer . 

If you are thinking of buying a leasehold property, contact our specialist team for a no obligation quote. Call 0800 138 0458 or email help@switalskis.com