The UK government is considering whether private homeowners can pay the cost of remediating their properties in buildings with cladding similar to that on Grenfell Tower.
At least 300 private-sector high-rise buildings in the UK are covered in flammable cladding like that on London’s Grenfell Tower, where a fire last year killed 71 people. An ongoing inquiry has heard that the Grenfell fire expanded rapidly by spreading across the cladding that covered the tower block.
Ministers have already diverted £400m from the budget for affordable housing of the Ministry of Housing, Communities and Local Government to help housing associations and councils reclad buildings that they own. But the government is trying to avoid using taxpayers’ money to fund similar work for the larger number of private sector blocks affected.
The housing ministry recently requested mortgage data on the privately owned properties from the Financial Conduct Authority, with the idea that mortgage providers could lend homeowners funds to replace cladding, a person briefed on the situation said. Replacing the cladding could cost at least £10,000 per household.
The FCA has yet to provide the information, according to two people briefed on the request.
One person familiar with the situation said the housing ministry did not have a legal right to receive information from the FCA. A spokesperson for the regulator declined to comment.
Some property developers, including Barratt and Taylor Wimpey, have already agreed to cover the cost of remediation for privately owned properties, and the government is hoping that others will do the same.
But leaseholders in two Manchester apartment blocks were told last week they must pay more than £10,000 each for recladding after a tribunal ruled that Pemberstone, an investment firm that had bought the freehold from the developer, did not have to pay.
A government spokesperson said it urged property developers to “follow” the “lead” of Barratt and others in paying for the costs of remediation.
“If they don’t, we have not ruled anything out,” they added.
The spokesperson declined to comment specifically on requests made to the FCA.
One consultant in the mortgage lending sector warned that adding repair costs to individuals’ existing mortgages would be “easier said than done”.
“How do you understand the level of indebtedness? How many of the residential mortgages were done under Help to Buy?” they asked, in a reference to the government scheme that provides loans to first-time home buyers of up to 40 per cent of the value of a property. The equity loans are interest-free for the first five years, but then incur charges, while householders must pay back a sum proportionate to the sale value of their home.
“If they are suddenly borrowing another £5,000 to £10,000, does it break the five-year fixed rate? Mortgage affordability stress tests would presumably apply.”
Additional reporting by Jim Pickard