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Apartment sales halve as cladding scandal forces lenders to withdraw mortgages

Latest monthly data from Land Registry shows flat sales nearly halved during September compared to last year.

Nigel Lewis

cladding

Sales of apartments in the UK halved during September, latest figures from the Land Registry reveal, as confidence in the flats market tanks as many lenders reject mortgage applications to buy apartments within blocks.

The data was published in a national newspaper yesterday, which reveals that during September sales of apartments reduce by 46% or from 11,500 during the same month in 2019 to 5,600, one of the most dramatic drops in demand for property seen since the 2008/9 financial crisis.

“These are shocking numbers,” TV presenter Phil Spencer (pictured) told The Sunday Times. “It’s like taking half the first rung of the housing ladder away, which takes half of the second rung away, which takes part of the third rung away, and so on.”

Part of the reason for this drop is likely to be the weak sales pipeline following the re-opening of the housing market in May; for example, house sales were also down in September. But only by 26%.

The rest of the apartment sales plummet has been blamed squarely on the cladding scandal.

Despite government action to help apartments owners within some of apartment blocks identified as most at-risk and fitted with most dangerous kind of ACM cladding, many thousands of apartment owners have become stuck in their properties – unable to remortgage and stymied by lenders who won’t lend to potential buyers.

ACM cladding

“The banning of unsafe ACM cladding and concerns about the fire risk of other types of cladding has made it difficult to assess the value of properties in high-rise blocks,” says Michael Jupp of lender trade association UK Finance.

“Without knowing what type of cladding and fittings have been used, how they were put up, whether remedial work is needed, and who will be paying for it, lenders and valuers have found it hard to understand what the value of a particular property is, meaning homeowners have been having difficulty remortgaging or selling their home.”

January 18, 2021

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