Government writes down cladding flat loan

Government writes down cladding flat loan

THE GOVERNMENT’S help to buy scheme has written down the loan Cecile Langevin took out for her flat, after she found the value had fallen dramatically due to flammable cladding.

Earlier this year, the New Capital Quay complex in Greenwich was found to have ‘multiple’ fire safety issues. The 11 blocks are home to around 2,000 people, and ‘more than a dozen’ concerns were identified, not including that the buildings are clad with panel combinations that failed the government’s fire safety tests.

A deficiency notice was issued by the London Fire and Emergency Planning Authority (LFEPA), which discovered defective fire doors, missing fire stopping, ‘dangerous’ fire escapes and holes in plasterboard meant to act as compartmentation to ‘stop the spread of flames and smoke’. In total it identified 16 fire safety concerns, including a ‘lack of arrangements’ for evacuating vulnerable and elderly residents.

An ‘ineffective maintenance regime’, broken firefighting lift and fire hydrant were also mentioned, LFEPA stating that ‘procedures to be followed in the event of serious and imminent danger to relevant persons are inadequate’, while 30 fire marshals continue to patrol 24 hours a day at a cost of £25,000 per week.

Galliard Homes, which owns the site, responded that some defects ‘had been addressed’, and that there had been ‘no issue with missing fire-stopping material, just an error during the inspection’. Residents were worried they would have to pay the estimated £20m to £40m bill, or around £20,000 to £40,000 per flat, while they also faced a £1.25m bill for the ‘round-the-clock’ fire warden patrols.

The company planned to sue the National House Building Council (NHBC) over ‘who pays for cladding that was certified as compliant with building regulations at the time of installation’, but have since ‘been deemed to have failed fire safety rules’. Most recently, Miss Langevin stated that she had discovered her flat’s value had fallen from £475,000 to £50,000 as a result.

She commented at the time that ‘it is like someone has taken away our life choices, our freedom. And nobody is doing anything about it’. The dispute ‘could take years to resolve’ between Galliard and the NHBC, with ‘potentially thousands’ of other owners nationwide left with ‘an unsellable flat’. The value change came after a RICS (Royal Institute of Chartered Surveyors) approved surveyor assessed Mrs Langevin’s apartment for her as she hoped to upsize, and she noted that the ‘whole complex is blighted’.

Now, The Guardian has reported that Homes England ‘has agreed to virtually wipe out’ her loan, which ‘raises the prospect of multimillion-pound losses for the government scheme on any flat that goes into negative equity’. It had written to her last week to say it had agreed ‘she could pay back her loan at the knock-down valuation’, adding: ‘Homes England has now determined that you may proceed with the redemption of your help-to-buy equity loan based on the valuation provided … ie at a market value of £50,000.’

She will now have to pay back 20% of the new valuation of £50,000 - £10,000 – which leaves the government with ‘a[n] £85,000 shortfall on its original loan’. It was reported last week, in addition, that residents of New Capital Quay are considering legal action against Galliard Homes over combustible cladding replacement costs.