We all remember the June 2017 crisis in West London only too well. The cladding on the outside of Grenfell Tower, a high-rise apartment block, caught fire and resulted in 72 deaths. Nearly four years later, and we are still tackling the cladding crisis.
Cladding and other fire safety issues for flats in hire-rise buildings could affect around 1.5 million flat owners in the UK; it has been predicted. Many of these face significant hurdles when trying to sell the flats or obtain a mortgage due to the fire risks associated. Even insurance premiums could increase for flat owners, and many are paying – or will have to pay – for safety patrols to keep an eye out for fires until the safety issues are resolved.
These 1.5 million people are living in unsafe buildings, often in fear of a fire starting and trapping them in their homes.
The Impact on Flat Owners and Potential Buyers
Recent research, based on a sample of 670,000 mortgage loans, found that:
- Hotspots for flats are London, Glasgow and Edinburgh.
- House prices would need to decline by more than 20% of their current value for a significant number of mortgage borrowers to end up in negative energy.
- Fire safety repair bills may not be proportional to the property value.
Ketan Thaker, head of European RMBS and Covered Bonds, said that “borrowers are likely to face higher mortgage costs because of an increase in their mortgage loan-to-value ratios, either as a result of reduced flat values or additional debt undertaken to fund repairs.”
Impact for Property Investors
While flats are clearly popular choices for different types of people (such as young professionals, couples and business people), investing in flats at the moment to sell or buy-to-let comes with lots of responsibility and considerations. You already have a responsibility to make your property safe for future owners or tenants – learn more about fire safety tips from our CEO Nicholas Wallwork here!
However, property investors now have to consider how investing in flats covered in cladding can affect their chances at a sale or rent. With the difficulties of re-selling and the fear of a fire in clad buildings, people are more deterred from making one of these flats their home. Is now the right time to make such an investment in this area? The government has promised help to flat owners facing paying high costs for removing the cladding, but serious change is yet to be seen nearly four years after the Grenfell Tower incident.
Property investors should be more considerate in their choice of investments, ensuring they ask the right questions around the materials used in the building. This will help them avoid making risky investments and allow them to choose a flat in the desired area (such as London and Edinburgh) without the fear of a tower fire attached to it.
Fire safety doesn’t just stop with cladding. As a landlord, you have the responsibility to make your flat safe for any tenants. Take a look at regulations online and gain some in-depth knowledge and advice from our latest fire safety video.