Wednesday, January 26, 2022

Hope for disguise victims as MPs urge mortgage lenders to let borrowers with shared property sublet

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It comes after the government announced steps to force developers to foot the bill to remove dangerous disguises

Shared apartments provided under the Affordable Homes program are currently subject to subletting restrictions, limited in all but “extraordinary” circumstances. The restriction is intended to prevent houses built with public funds from being used for commercial purposes.

Shared homeowners deemed unsafe due to siding or inadequate fire safety standards should be able to sublet their homes after the housing secretary wrote to advise lenders to be more flexible.

However, the government has now changed its guidelines on grant funding to clarify that building security issues should be treated as exceptional circumstances.

This will allow co-owners to sublet their homes with their owner’s consent, but mortgage lenders will also need to give permission, which they have been slow to do.

As a result, Housing Secretary Christopher Pincher wrote to mortgage lenders encouraging them to accept sublease applications from affected co-owners.

To reduce associated costs, Mr Pincher also urged mortgage lenders to consider extending the period that a co-owner can sublet their home before having to convert it into a rental mortgage, and he asked lenders to waive all premiums associated with the mortgage extension consent period.

In identifying the Government’s renewed approach to building security, Mr Pincher highlighted four key principles.

He said: “We need to take a proportionate approach to building assessments overall.

“Too many buildings are seen as costly refurbishment or mitigation work, and tenants are caught by an overly cautious approach that goes beyond what we think is necessary.

“We must protect ordinary renters and guarantee that no renter living in their own home pays a dime to have dangerous paneling repaired.”

Mr Pincher reiterated the Government’s recent stance that the industries at fault should pay.

“Those who built and contributed to our portfolio of unsafe buildings, and those who continue to compromise on building security, will have to pay for deficiencies to be fixed instead of taxpayers or tenants,” he said.

“And we must hold accountable those individuals and companies who have knowingly put lives at risk and continue to do so.”

Mr Pincher told lenders immediate steps should be taken to support affected common owners who are currently facing restrictions.

“I understand that you need to assess your organizational risk profile when considering subletting requests from common owners,” he said.

“I also appreciate that you need to consider how waiving the 1% annual premium over a consent period aligns with your responsibilities under competition law.

“But I hope that you will understand the situation of the affected co-owners in terms of building security through no fault of their own and will try to grant their subletting requests.”

The letter follows Michael Gove, Secretary of State for Leveling Up, Housing and Communities, who announced on January 10 that the government had refocused its approach to building security.

Under the new plans, wealthy developers and companies would be forced to pay to fix the disguise crisis, with harsh penalties imposed on those who don’t act.

Mr Gove assured that no tenant living in their own home will have to pay a dime to repair unsafe paneling, while previous plans would have left the bills to the tenants.

The industry has been given two months to agree to a financial contribution scheme to fund the new plan, failing which the government will enforce a statutory solution if necessary.

In addition, a new team is being formed to prosecute and expose companies for breaches, forcing them to shoulder the burden of building security.

Mr Gove said: “More than four years after the Grenfell Tower tragedy, the system is broken.

“Renters are trapped, unable to sell their homes and facing huge bills.

“But the developers and disguise companies who caused the problem are evading accountability and have reaped huge profits during the pandemic while hard-working families have struggled.”

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