Trying to sell your home in a cladded high-rise building? Now you can!
If your home is in a cladded block bought under the Government’s ‘Help to Buy’ scheme, you will be relieved to know that, at last, you can now sell it at a more realistic price.
On 4 August 2021, the Government published new advice on repaying the ‘Help to Buy’ loan. You no longer need to repay the loan at the original ‘unaffected’ market value. Instead, you can now arrange for a valuation based on the realistic value of your property, including the impact of any dangerous cladding, such as that used on Grenfell Tower.
Ever since the Grenfell tragedy in June 2017, leaseholders with a loan agreement under the ‘Help to Buy’ scheme, run by Homes England, living in a similarly clad high-rise building, felt trapped in their own homes from rising costs and inability to sell.
Many people have faced vast debts and even bankruptcy from the huge remediation bills – often running into tens of thousands of pounds – being presented to residents by the buildings’ owners.
To compound the issue, other costs to the leaseholders have been rising ever since the Grenfell crisis, as stated in this Which? article. These extra costs were not only for the remedial work but also for pricey waking watches to ensure no fires broke out, rapidly increasing insurance premiums, and more expensive service charges.
If you tried to sell your home to escape the worries and financial burdens, you then hit another barrier. Because homeowners under the ‘Help to Buy’ scheme were being told that, to repay their loan, they could not sell their homes for less than their ‘unaffected’ market value. This rule clearly ignored any presence of dangerous cladding, further trapping leaseholders within their homes.
Chartered Surveyors can now provide realistic valuations
At last, having assessed the difficulties that leaseholders face, Homes England published new advice on 4 August 2021. This advice states that surveyors providing valuations of your property should take into account the impact that dangerous cladding has on the property value before selling or redeeming the loan on your home.
The new advice from Homes England says that:
You must appoint a ‘specialist valuer’ to consider the external cladding on a building and its impact on the market value before selling or redeeming.
You must check that the specialist valuer is a member of the Royal Institution of Chartered Surveyors (RICS), as we at Morgan Sloane are. The appointment of your chosen valuer will also need to be agreed by Homes England.
The valuation surveyor will need to:
o fully check the condition of the property
o factor in the estimated costs of remediation work
o find out who is responsible for the costs. If it’s you, the leaseholder, then the surveyor will check if you have any other means to pay, such as through the Government’s ‘Building Safety Fund’ or via an insurance claim to recoup your costs
This welcome change of process could help you, as the leaseholder, to fully redeem your loans at bargain rates.
Leaseholders using the ‘Help to Buy’ scheme could borrow up to 20% (40% in London) of the full purchase price of your home from the Government. Later, on selling to move on, your loan amount would be repaid based on 20% (or 40% in London) of your property’s market value at the time of sale.
Under normal circumstances, the property market value increases in price, meaning that your loan amount to be repaid would also be higher. But since Grenfell, buildings with the same unsafe ACM cladding have seen their property prices fall dramatically. Despite that, Homes England insisted that repayments had to be based on the previous ‘unaffected’ valuation.
With this change of advice, if your valuation shows that the property has markedly depreciated since the cladding scandal, your loan repayment will now be based on the lower value.
Staircasing your home
Homes England ‘Help to Buy’ loans can also be redeemed at the lower rate if you decide to own more of your home by ‘staircasing’ your share of it.
For example if you currently own 25% of the property and rent 75%, you can request to own a further 25% through the scheme to then own half the property. To achieve your 50% ownership, you will need a property valuation to base your redemption payment on the percentage you borrowed of that new valuation figure.
We will be writing more about how to ‘staircase’ your home in the near future, so do keep an eye on our news page for the latest expert advice, or contact us to request to be added to our mailing list.
Specialist advice will help you get the best outcome
As the cladding issue is continually evolving, with the Government working towards a resolution with industry stakeholders, we’re keeping a close eye on any changes that could affect you.
Meanwhile, Homes England have said that it would consider specific circumstances in some cases. They must also approve the use of your choice of RICS approved surveyors before they can accept the lower valuation, which takes into account any existing cladding and damage that needs remediation works done.
When you’ve chosen your surveyor, all you then need to do is to contact Homes England and let them know that you wish to appoint a valuer, naming the firm you wish to use. They will then contact us, and we will take it from there. To see a copy of the guidance that Homes England need us to follow, you can find it here.
Morgan Sloane will help to set you free
As Morgan Sloane is regulated by RICS as well as members of the Association of Leasehold Enfranchisement Practitioners (ALEP), and the Independent Surveyors & Valuers Association (ISVA), rest assured that you’ll be in expert hands.
Morgan Sloane has been surveying and valuing homes and buildings since 2012. Our specialist service and comprehensive advice has helped individuals and businesses to successfully buy, sell and manage properties.
We are particularly keen on helping people in ‘Help to Buy’, ‘Housing Association’ and ‘Shared Equity’ situations, ensuring that you get a fast, reliable and affordable service. Whether you’re selling, re-mortgaging, staircasing or paying off your ‘Help to Buy’ loan, we’re here to help, whatever your circumstances.
With the ever-evolving cladding issue, keeping in touch with the latest situation from valuation specialists is strongly advised. The team here at Morgan Sloane are, in turn, staying in close contact with our knowledgeable associates to ensure we always have the latest information to share with you. So, when you need to redeem your ‘Help to Buy’ loan, we will have up to date specialist advice to achieve the best outcome for you.
Do get in touch to find out the latest situation and how we can help you in your particular circumstances. Telephone 0800 161 5767 or email firstname.lastname@example.org for a friendly initial chat.