More than one million flats in England could be ineligible for a mortgage because of concerns surrounding unsafe cladding, according to the latest research.
The report, which was compiled by Capital Economics, states that if it is assumed that the statement from the Ministry of Housing, Communities and Local Governments (MHCLG) did not affect the behaviour of lenders, then all buildings that are taller than three storeys or 11 metres could be affected.
Despite the MHCLG stating that buildings that are shorter than three storeys or 11 metres will not require an ‘EWS1’ form to be granted a mortgage, Housing Minister Christopher Pincher did state that lenders have the right to demand one from leaseholders regardless, as it is not a requirement to do so.
The report found that if the EWS1 form was in place in 2019, then 40 per cent of the 137,000 flats sold in the year would have faced additional complications in gaining mortgage finance or obtaining a form.
It did state, however, that it was unclear how much impact this had on sales of flats in 2020, with the impact of the coronavirus having a significant impact on property transactions at the beginning of the year.
The report also said: “Affected flats may directly see delays in transactions, and disrupted property chains could delay other sales.
But putting a hard number on the potential effect is difficult. For one, what happens will depend on policy – if the Government or lenders were to relax the rules, then any disruption could quickly disappear.”
For help and advice on matters relating to residential property, contact Mary Brennan at Mackrell.Solicitors today.
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