30.6 C
Cheshire
Wednesday, June 19, 2024

UK Government Faces Potential Multibillion-Pound Bill in Building Safety Crisis

The UK government is confronting a looming crisis in building safety, with warnings of a multibillion-pound bill to rescue up to 1.7 million potential victims in the aftermath of the Grenfell Tower disaster. Unless addressed, this crisis could lead to innocent people losing their homes and lenders facing substantial losses due to forfeited leases.

The crisis stems from flaws in the government’s leaseholder protection legislation, which was introduced last year to address issues arising from the Grenfell fire in 2017. However, this legislation leaves three groups of people unprotected: those residing in low-rise flats, those who have enfranchised, and those who own more than three flats.

As a result, a significant number of homeowners—up to 1.7 million—remain in an uncertain position until all buildings are assessed for fire safety issues. The lack of clarity regarding affected buildings has impacted the entire flat market, leaving those in unsafe buildings unable to sell their flats or facing the burden of unaffordable costs for necessary safety remediation, including addressing Grenfell-type cladding on low-rise blocks. Some may even be living in potentially dangerous flats that require immediate safety measures.

The government’s partial leaseholder protections, introduced last year, have created a problematic three-tier flat market: those fully protected, those partially protected, and those with no protection. This has complicated conveyancing processes, as professionals must determine a buyer’s potential liability based on complex information about the seller and building owner. Consequently, a significant percentage of conveyancers are declining new instructions on flats, potentially stalling a substantial portion of the UK housing market.

The situation may worsen next year when new banking rules, following “Basel 3.1” standards, come into effect. These rules will compel lenders to revalue loans in cases where there is a likely permanent reduction in a property’s value. Given the current legislation’s creation of a three-tier flat market, widespread revaluations appear inevitable, potentially leading to hardship for partially or wholly unprotected leaseholders and financial losses for banks.

An amendment to the government’s bill, tabled by the Earl of Lytton, a crossbench peer, is scheduled for debate in the House of Lords. The amendment proposes making developers or lead contractors permanently liable for building defects at the time of construction or establishing a building industry levy to fund remediation if the builder no longer exists. This amendment aims to address the crisis, protect the 1.7 million homeowners excluded by current legislation, and eliminate the three-tier flat market.

The amendment enjoys wide support, with endorsements from over 48,000 people, the National Residential Landlords Association, and Property Mark, which represents 17,500 property agents. Notably, it has also garnered support from former state premier of Victoria, Australia, Ted Baillieu, who praises it as a comprehensive and equitable solution.

If the amendment is rejected, the chancellor may face the difficult choice of residential valuation write-downs, people losing their homes, and negative repercussions for the banking system, or the government may have to step in and bail out up to 1.7 million people while contending with the problematic three-tier flat market.

For more information on the Earl of Lytton’s amendment, please visit www.buildingsafetyscheme.org.

To sign the petition, click here. You can watch a video from the petition’s founder, Jake, to find out more here.

spot_imgspot_img

Latest

Euro 2024 Sign-Up Offer Sky Bet – 50/1 On Harry Kane to Start vs Denmark

England will face off against Denmark on Thursday, June...

Impact of Unregulated Cosmetic Consultations on Practitioners

In September 2023, the government announced it would launch...

Tiger Woods: PGA Tour ‘exemption’ as Saudi PIF talks ‘progress’

The PGA Tour has given golf icon Tiger Woods...

The Night Store Presents ‘Island Girl’ Spring/Summer Nightwear Collection

The Night Store, the luxury nightwear brand renowned for...
spot_imgspot_img

Newsletter

Don't miss

Family pay tribute to “local legend” involved in fatal Neston collision

The family of a man who died following a...

The Night Store Presents ‘Island Girl’ Spring/Summer Nightwear Collection

The Night Store, the luxury nightwear brand renowned for...

Annual city charity walk date announced

Chester businesses are stepping up to support one of...

Scott Dylan Emphasises Mental Health and Community Support During Pride Month

Scott Dylan, Co-founder of Inc & Co, advocates for...

More News

The benefits of outsourcing legal transcribing to small law firms

Managing a small law practice requires juggling several responsibilities while maintaining high levels of service. Legal transcription is a discipline that demands both quickness...

Ascendancy Fitness Expansion Makes It Warrington’s Largest Independent Gym

Ascendancy Fitness, recognised for its dedication to member experience and its distinctive purple and neon electric ambiance, is pleased to announce its expansion. With...

Home care team announces new ownership in Cheshire East

Local home care provider, Bluebird Care Cheshire East, has welcomed a new owner. Under new leadership from director Liam Jones-Davies, the home care team is...