In what feels like a grimly inevitable next step in the external cladding fiasco, it has been reported that the number of flats being bought and sold in the UK has halved in the past year. At the same time, prices have also dropped by almost 50%.
This story has been developing since the Grenfell Tower disaster in June 2017, a tragedy which has been blamed squarely on the unsafe external cladding which wrapped the building. Enquiries following the disaster necessitated that the government implement strict new rules on external cladding, stating that all high-rise flats must have their cladding safety checked and that a building cannot be confirmed as ‘safe’ without a formal inspection finding as much.
This has effectively rendered thousands of flats around the country worthless as the owners are stuck in a long waiting list for inspections. Until they have had one, and it has been confirmed that the cladding is safe, owners are unable to sell their properties.
Now, in an inevitable next phase of the story, it’s been revealed that the value of flats has halved in the past year and so too has demand. In September 2020, transactions were down by 5,600, or 48%, compared to September 2019. It is estimated that the financial loss this has caused is around £1.6 billion.
These figures, published by The Land Registry, speak volumes about the nation’s current sentiment towards flats, an attitude which is not least caused by the news that flat owners are having to pay as much as £40,000 to replace unsafe cladding because building owners, or freeholders, are refusing to cough up for the work.
The Sunday Times has published data to suggest that there are 20,000 high-rise flats around the UK which “still have the same cladding as Grenfell Tower”, and an estimated 86,000 private high-rise flats which are “wrapped in other types of inflammable materials”.
Much of the losses in demand and value have resulted from fall-throughs. Many potential buyers are, for example, finding that their mortgage providers are dropping out or completely refusing to lend in first place on properties which have unchecked or unsafe cladding.
In an attempt to help owners, the government has earmarked £1.6 billion to fund necessary cladding replacements, but MPs estimate that overall national costs might be closer to £15 billion and that the government’s pledge so far is entirely insufficient.
If you have any questions about external cladding or the UK’s flat/apartment market, our in-house property expert, Russell Quirk, is happy to help. Just drop us a message in the comments section below, and he will get right back to you.