Will I be prevented from selling my flat if it has cladding?

You will not be prevented from selling your flat with cladding. At worst, you can sell to a cash buyer for a quick sale, which will likely be at a reduced price. There are several companies (some described as 'sharks') who have been buying up flats in this way, which may be a solution if you are desperate to sell. However, updated guidance from RICS means that 6 major lenders are now willing to lend on qualifying buildings, so you should be able to sell to any regular buyer, for a reasonable price.

What are the costs involved with selling my flat with cladding?

If your flat has potentially dangerous cladding and you still do not have an ESW1, your seller may want a reduction in the price of the flat. You should speak with your estate agent, who should be able to advise on what reduction is expected on a flat of your type, in your area. You may also find that this adds complexities to the enquiries stage, which may eat up solicitor time. Get a Fixed Fee quote to avoid unexpected extras when it comes to paying your conveyancing bill: Get a Conveyancing Quote Fixed Fee | Rated Excellent on Trustpilot | No Sale No Fee | On all Mortgage Lender Panels

Should I buy a flat with cladding?

If the cladding has been deemed safe, there is no reason to be put off. If the cladding is unsafe, this may be an opportunity to purchase a flat at a reduced price, however, you need to weigh up the risk. Buildings with 'unsafe' cladding are required to have 24 hour supervision from professional fire marshals, so the risk to safety is limited as this guarantees an early warning to enable swift evacuation. Make sure that your conveyancing solicitor enquires as to whether there is a sufficient remediation plan in place to make the building safe, and to an acceptable timescale. You will also want to check whether the building is covered by a government subsidy to pay for the works and how much of the remediation cost you may become liable for, by purchasing the leasehold. Get a Conveyancing Quote Fixed Fee | Rated Excellent on Trustpilot | No Sale No Fee | On all Mortgage Lender Panels You should also consider the adverse effect on your home insurance premium. SAM Conveyancing recommends you compare insurance quotes to see what costs to expect.

When is a leaseholder liable for remediation costs?

If the leaseholder does not meet the following criteria, they may be liable for a share of the remediation costs, however this will be capped and spread over 10 years. The protections will apply to leaseholders whose property is in a building above 11m (or 5 storeys), and where, on 14 February 2022: the property was the leaseholder’s main home, or the leaseholder owned no more than 3 UK residential properties in total. Where the property was not the leaseholder’s main home on 14 February 2022 because they had to move out and sublet, it will be covered if the criteria above are met. The protections will automatically transfer to any future buyers of the property. This means that all new owners of a property that was eligible for the protections on 14 February 2022 will be covered, even if you have bought it since then. Exceptions Building owners and landlords are now liable to pay to fix historical fire safety defects if: they are (or are linked to) the developer of a building with fire safety defects, or they meet a certain wealth threshold If the building owners and landlords do not meet these tests, they will only be able to pass on non-cladding costs up to a cap. The cap is normally £10,000 but varies based on property value and is higher if you are in London It is now illegal for building owners and landlords to pass on costs above the cap to qualifying leaseholders. The cap applies retrospectively, which means it includes money you have spent so far on relevant costs. Applications The leaseholder protections covers works to remedy a building safety risk, as defined in the Building Safety Act. This includes defects caused in the construction or refurbishment of a building in the past 30 years that cause a safety risk from the spread of fire or collapse.

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Selling a Flat With Cladding

by:

Caragh Bailey

(Last Updated: 08/12/2023)

Created on:

12/01/2023

Read by:

114

11 min read

Key Takeaways

With an ESW1, which states that the building is safe, the property should be mortgageable and selling should be relatively smooth sailing. You should still use a conveyancing solicitor who is experienced with leaseholds affected by the cladding crisis.
New guidelines mean mortgages are now available on qualifying flats affected by the combustible cladding crisis, making selling much easier
Leaseholder protections shield qualifying leaseholders from cladding costs. There was an issue where leaseholder protections were not being transferred in a lease extension by the existing owner, but this has now been rectified with the enaction of the Levelling-up and Regeneration Act 2023. Leaseholder protections are transferred to the new lease or owner in sale and extension.
You may still need an ESW1 certificate for selling a flat with cladding
If your lease has run short, consider extending your lease for a better sale price

Have you been asked to pay for the remediation of a safety defect?

Leaseholders protections ensures that you are not liable to pay.
If you qualify, you will be protected from the financial burden of remediation costs concerning building safety.
If you're trying to sell, you will need a Deed of Certificate to prove that the leasehold is subject to leaseholder protections.
Is the freeholder still forcing you to pay for these costs? We can help solve this property challenge.

Find out more

Good news for homeowners selling a leasehold flat

New guidance from RICS to valuers regarding cladding has meant that there are now 6 major lenders offering mortgage products on affected flats and maisonettes, making it much easier to find a buyer and get a reasonable price.

Does my flat qualify?

1

Your building will be fixed by the developer (this is known as 'self-remediation');

2

You're covered by one of the recognised Government schemes – the Developer Remediation Contracts, the Medium Rise Scheme or the Building Safety Fund;

Or

3

You're covered by the leaseholder protections in the Building Safety Act.

What if my flat doesn't qualify?

If your flat doesn't qualify and you do not have an ESW1 stating that your building is safe, lenders may still undervalue your property. In this case, you may be stuck selling to cash buyers only and/or at a significantly reduced price. It may be better to stay put until your building is made safe.

Silver lining? - if your property is undervalued, now may be a good time to take advantage of a relatively cheap lease extension, on the expectations that the cladding concerns will be remedied eventually and the value should recover.

Do I still need an EWS1?

Each lender has their own requirements. If you are able to get an ESW1 it will certainly help your sale, but it may still be possible to sell without one, although expecting the price to be affected.

RICS Guidance as of March 2021 states:

Buildings of 4 storeys and under will not need an EWS1
Buildings of five and six storeys will not need an EWS1 if cladding covers less than 1/4 of the building and is not ACM, MCM or HPL. An EWS1 will be required if the balconies stack vertically above each other and either both the balustrades and decking are constructed with combustible materials (eg timber), or the decking is constructed with combustible materials and the balconies are directly linked by combustible materials.
Most buildings above six storeys with any form of cladding will need an EWS1 before they can be sold.

The landlord of the building (usually the freeholder), is responsible for getting your ESW1, but may well pass the costs onto the leaseholders via the service charge or by charging individuals for copies of the certificate.

Selling flat without EWS1

It can take 6-12 months to get an ESW1 certificate and some building owners are still dragging their heels. They are also only valid for 5 years, so buildings which got their certificate when they first became available will require new ones.

Ask the freeholder for an EWS1 certificate, or to book an assessment if they have not yet done so. If you do not have an ESW1 certificate, but your flat qualifies for lending under one of the three criteria above, you may still be able to sell to buyers who are funding their purchase with a mortgage.

If you have an EWS1 with an A3 or B2 rating, then it does not meet adequate safety standards. If remediation has been carried out, then a new EWS1 will be required to assess the updated fire safety risk of the new External Wall System.

In March 2022, RICS issued the following guidance, where remediation is still required:

Lenders will take the necessary steps to facilitate lending where a costed and funded remediation plan is agreed with committed dates for starting and finishing all specified/required work*.

*Lenders will work with the Government, RICS, the Building Societies Association (BSA), and UK Finance to establish a framework to enable verification of these key requirements, to ensure transparency for leaseholders, and prospective purchasers.

This would indicate that the new lending guidance should apply to currently unsafe flats, where your building has committed dates for the specified work.

What will remediation cost your buyer?

Despite government subsidies, many leaseholders have had to shoulder some of the cost of remediation. Your buyer will want to know what costs they might be liable for if the remediation is yet to be undertaken.

It seems that only buildings taller than 18 metres will be eligible for government funding, despite some buildings of 5 & 6 storeys still requiring an ESW1. Further efforts to make developers pay for the remediation are yet to be finalised.

The The Building Safety Act 2022 made it illegal to pass on the remediation costs of unsafe cladding to leaseholders, in most circumstances:

'If you have a qualifying lease and live in a relevant building with an unsafe cladding system.'

Find out whether you, or your buyer would qualify for this protection at Gov.UK

How does this effect the legal conveyancing when selling a flat with cladding?

If works are still required to make the building safe, the seller will be taking on the risk. They will need to secure a mortgage, so there will need to be a sufficient remediation plan in place. Their conveyancing solicitor will want to ascertain the following during legal enquiries:

Whether the property is cladded; and in what material (Specifically ACM, MCM or HPL).
When the Fire Service visited and inspected the building and when the last inspection took place.
Check the EWS1 (if required) and fire safety risk assessment, when these were last updated and whether any recommendations have been followed. Any serious alterations or extensions after these assessments would entail getting new ones.
The risk assessment must cover all non-domestic premises, including the common or shared parts of blocks of flats or houses in multiple occupations - Fire and Rescue Authorities have a statutory duty to ensure compliance and enforce requirements where necessary.
In the event that sellers cannot provide an up-to-date and legally compliant fire risk assessment, you will be asked to obtain an assurance from the freeholder/management company 'within a reasonable period of time'.
Where the EWS1 deems the existing external wall system to be unsafe, evidence of a sufficient remediation plan.
Where the EWS1 is necessary and missing or deems the external wall system to be unsafe, evidence that the building/lease qualifies to protect the buyer from liability for any cladding remediation costs.
Where the building/lease does not qualify and the buyer is not protected from liability for cladding remediation costs, a reasonable adjustment to the sale price is made.
Sellers should provide confirmation from the freeholder/management company that, if there is no fire risk assessment plan available, there is a plan in place to undertake one in the future. This may involve the seller having to pay an additional fee to the freeholder/management company (perhaps £100).
If the buyer is to acquire an interest in the freehold/management company, then they must be made aware that there is a risk of enforcement action as long as the assessment isn't produced and that the freehold/management company, of which the buyer is a part, is liable for any costs of the enforcement action and must comply with enforcement directions.
If the buyer is to acquire an interest in the freehold/management company, then they must be made aware that they would become partially liable for remediation costs as required in any existing or future ESW1.
Whether there is a sprinkler or other fire suppression system installed.
Whether a building has undergone refurbishment; if it has, then they must enquire as to whether the fire risk assessment was updated as a result.

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Written by: Caragh Bailey

Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.

Reviewed by: Andrew Boast

Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.

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