We need a definitive plan to solve the cladding crisis that doesn’t punish leaseholders

Previous estimates – because no one appears to know exactly how widespread this scandal really is – have put the number of homes affected at around 1.5 million. The new number is out of a total of 29.3 million properties across the UK and so represents 15.7pc of all homes.  […]

Previous estimates – because no one appears to know exactly how widespread this scandal really is – have put the number of homes affected at around 1.5 million.

The new number is out of a total of 29.3 million properties across the UK and so represents 15.7pc of all homes. 

The vast majority of these properties will currently be unsellable because of the long-winded process of getting an EWS1 form – due to freeholders’ inertia and the lack of qualified surveyors – and carrying out any necessary repair work. 

While the Bank of England has reported the highest level of mortgage approvals since August 2007, it’s clear that this current boom, stoked by the stamp duty holiday, is taking place while a large proportion of properties are barred from the market. This underlines that the soaring house prices recorded in indices by property websites, banks and the Government alike are only telling half the story.  

Leaseholding homeowners are excluded from the market frenzy, stuck in the middle of a circle of blame between surveyors, freeholders, the Government and banks. They are powerless to solve the problem that plagues their lives and condemned to wait years for the requisite fire safety tests and be presented with the bill.

A number of plans have been mooted by the various parties to pay for changes to buildings that are under 18m, which are unable to tap into the Government’s pre-existing pot for tall buildings. 

But none will work: if leaseholders are made to pay, they will go bankrupt en masse. Freeholders, which make money from ground rents, are fairly illiquid so lack the cash to pay up. And why should the taxpayer stump up the money for the problems created by developers?

This situation needs a creative and original solution to find the billions needed to fix it.

It may have been found in a plan by former Bank of England economist Dean Buckner, developed for the Leasehold Knowledge Partnership, a campaign group. He has argued that the Government should borrow the cash using a special purpose bond, with the funds recovered by a variety of levies on foreign buyers, developers and ground rents paid to freeholders – which would be matched by the Government.

The charges would be recovered over 50 years and the borrowing cost would be about 0.6pc. This means the money would be available upfront for any repair works and not passed on to leaseholders through service charges or eye-watering bills. 

The Government has long talked the talk about first-time buyers, throwing subsidies to get young people on the property ladder. It now needs to take the enthusiasm and lateral thinking it used then, and apply it to this problem that is silently ruining the lives of millions.

Source Article

Next Post

The Coming 5G Boom Is Not Fully Priced in These 2 Stocks, Say Analysts

Tue Jan 5 , 2021
It’s in the nature of human ingenuity to constantly adapt technology, improve functionality and enhance its usefulness in our lives. The next generation of WiFi, 5G, meets that standard, and then some. The new tech brings us faster connections, lower latency, more efficient data transfers, and improved security – and […]