Banks agree to lend on properties with building safety issues where remediation plans are in place

Six of the country’s biggest banks have agreed to support leaseholders by agreeing to provide mortgage finance for properties in buildings affected by unresolved building safety issues, so long as the building has a costed and funded plan in place for remediation works or qualifies for a government funding scheme.

Lenders have said that they will lend on buildings impacted by building safety issues, subject to their other policy and regulatory requirements being met, where plans have been agreed for the building to be self-remediated by the developer, or the building qualifies for an existing or future government remediation scheme, such as the Building Safety Fund. This includes the scheme being developed for 11-18m buildings without a developer.

The banks that have signed up to the statement are Barclays Bank, HSBC, Lloyds Banking Group, Nationwide Building Society, NatWest and Santander.

Announced in a joint statement with the Royal Institution of Chartered Surveyors (RICS), the lenders said that the introduction of the developer self-remediation scheme, plans to reopen the Building Safety Fund, and a new remediation scheme for buildings between 11-18m will help to remove the financial risk to leaseholders in blocks of flats 11m and above.

We know that many housing associations will not always be entitled to these government funds for remediation, such as where they commissioned a building and are therefore deemed to be the developer. In these instances, the Department for Levelling Up Housing and Communities (DLUHC) has told us that a letter citing that there is a costed and funded plan in place for remediation works would be sufficient evidence for the lenders that have signed up to the statement. They recommend that this comes from the most senior person in the organisation.

We recognise that inspection programmes are ongoing and could take some time. For buildings where there is not a costed and funded plan for remediation works in place, the NHF will continue to engage with lenders, valuers and DLUHC to improve confidence around lending until remedial works programmes can be completed.

The NHF welcomes this announcement which will make a positive difference and give much needed stability to qualifying leaseholders. However, we also continue to call on the government to negotiate with contractors as well as developers to pay to remediate buildings to ensure all homes are safe.

If housing associations find that their experience with the lenders do not match what has been outlined in this announcement, please get in touch.