Re-mortgaging, staircasing or selling your home where a mortgage lender requests certification relating to government advice notes
Following the fire at Grenfell Tower in June 2017, the government has issued a series of advice notes intended to provide guidance to building owners about how to make sure their properties are constructed and maintained safely.
In recent months, mortgage lenders and valuers have been asking people who apply for mortgages on properties in purpose-built blocks to provide independent certification that the property meets the guidance in these government advice notes. We have seen a particular focus on Advice Note 14 (AN14) - which relates to external wall systems of buildings over 18m or above in height that do not incorporate Aluminium Composite Material and Advice Note 21 (AN21) - which relates to balconies on residential buildings.
What is an Advice Note 14 compliant report?
To satisfy the requirements of AN14, it is often the case that an intrusive inspection of the external walls needs to be carried out by a qualified engineer. The inspection is to verify the external building materials and insulation materials, and the quality of their installation. The inspection focuses on combustible materials and the structural installations to prevent fire spreading. To achieve this, cladding or other wall systems often needs to be removed to ensure the inspector has full access to see the fire spread prevention measures.
What is the issue?
In many cases, in order to follow the government advice notes for a particular block substantial and intrusive expert testing and analysis of the building system is required. For example, Advice Note 14 includes guidance to building owners in relation to ensuring that external wall systems have been installed correctly on buildings of 18m or above in height.
Building owners can’t rely on the fact that a building received Building Control sign-off at the time it was built in order to confirm that the building meets this guidance, and so significant and intrusive testing of the external wall system may be needed before the guidance can be met.
The Group aims to follow these government advice notes as they emerge, and we have a comprehensive programme in place for checking our buildings in light of the guidance. However, in common with other housing associations, we own a large number of buildings that the guidance applies to, and so this process takes time.
This does not mean that affected buildings are unsafe, and it is not a legal requirement for a building to meet the government guidance. However, notwithstanding the widely publicised issues, we are seeing some lenders take the view that they will not be prepared to offer a mortgage until it has been independently certified that the building meets government advice notes.
What this might mean for some leaseholders
Unfortunately, while this situation continues, in some cases it may not be possible for affected leaseholders to re-mortgage, staircase or sell their homes.
This is a nationwide issue which is now affecting thousands of leaseholders. We know this includes some of our own leaseholders, and we are sorry for the upset and frustration that this must cause.
What we are doing
We want to do everything we can to support leaseholders whose mortgage application or sales process has been disrupted as a result of the approach that lenders are taking.
We have a comprehensive programme in place for checking our buildings in light of the guidance. However, in common with other housing associations, we own many buildings that the guidance applies to, and so this process takes time.
In addition, together with our colleagues at the G15, a group of the largest housing associations in London, we will be calling on the new government to step in. We are asking the government to provide clear guidance for both building owners and mortgage lenders on the proportionate implementation of their building safety advice notes.
The safety of our residents is our utmost priority. We maintain a comprehensive programme of health and safety assessments and fire risk assessments for all buildings we own or manage and this year the Group makes substantial investments in improving our homes, year on year.
We would like to reassure our residents that all the Group’s homes have an up-to-date Fire Risk Assessment. These are independently reviewed every year and any recommendations are dealt with immediately or, where appropriate, put into a programme of work to be completed within a suitable timeframe.
Why can it take so long to deal with Advice Note 14?
The work to produce an AN14 certification is challenging. In addition, external factors add to the process. It takes time to appoint specialist contractors with the appropriate skills and professional indemnities, especially when many other organisations are also conducting similar inspections. Preparing for inspection is a technically complex process and detailed preparation is required to ensure the correct parts of each building are exposed. The contractors work at height and sometimes poor weather means it is not safe to work; they have also found the physical process of removing parts of buildings sometimes takes longer than expected.
We will be continuing our programme of safety inspections and carrying out any remedial works needed.
At the same time, our aim is to get the clarification that we need from the new government in the coming months. Our hope is that this will reassure residents, encourage mortgage lenders to take a more considered view, and give building owners a reasonable and realistic timeframe in which to follow government advice.
In the meantime, we appreciate that this is a frustrating and worrying time for our customers who are affected by this and we will continue to work on providing assurance to mortgage lenders where we can.
If you are concerned that your ability to re-mortgage, staircase or sell your home might be affected by these changes, please seek advice directly from your lender or mortgage broker.