Hello Medway Property Investors,
It’s good news for leaseholders as a Government announcement made on 21st July by the Housing Secretary; Rt Hon Robert Jenrick MP stated that EWS1 forms should not be requested for buildings under 18m.
This will certainly come as good news to all those leaseholders who are trapped in their homes; currently unable to sell or remortgage without a signed form to present to their lender.
So, what does this announcement cover? Well, there are four main points:
- Advice from independent expert group finds there is no systemic risk of fire in blocks of flats under 18 metres
- Residents need to be reassured on safety and the government recommends an urgent move to a proportionate approach to low and medium-rise buildings
- Following the expert advice, the government sets out that EWS1 forms should not be requested for buildings below 18 metres
- Major lenders welcome the move, paving the way for EWS1 forms to no longer be needed, which should free leaseholders from cost and delay and provide confidence to the housing market
I know that this news will be particularly welcomed by those owning a flat at Chatham Dockside, who currently face a £20k bill each for remedial works.
There is, however, a very important word peppered throughout the recent announcement, and this is ‘should’… I’ve read a huge number of celebratory headlines and articles which outline how it is basically time for leaseholders to crack open the champagne, however this doesn’t seem to be a guarantee or immediate in terms of timing.
Perhaps it’s time to put the champagne back into the cupboard (for now) as the announcement has highlighted three headline lenders (HSBC UK, Barclays, Lloyds Banking Group) and simply stated others. These lenders have committed to reviewing their practices and not confirmed that anything has changed… yet. It is likely that whatever decision is reached by the major lenders however, will cause the rest of the market to follow.
What will be interesting to see is how these properties will be affected in terms of their value and whether the negative PR will have had a detrimental effect meaning that many could find themselves in negative equity or with an extremely high loan to value mortgage.
In addition, the announcement says nothing about cladding needing to be removed and replaced. I wonder whether this will form a part of new leasehold agreements and whether people will want to purchase a flat in a low-rise block where remedial works are (or could be) required.
I’m optimistically positive, however don’t think we have seen the full impact yet. It’s a shame that it has taken two years of dithering to conclude that there is ‘no systemic risk’, however this announcement is a positive step forward.
Whilst I do think there could be issues generating sufficient interest in selling, it could pave the way to homeowners having more options (such as, perhaps, renting out and keeping the flat as an investment). This is very positive!
It will certainly be interesting to see how this change pans out and I will endeavour to keep you updated.
If you are an investor and wondering which investment strategy to adopt or would like to explore diversifying your portfolio then I will be more than happy to help. The best way to reach me is via LinkedIn and I will be more than happy to book in an initial consultation at your convenience.