Since the Grenfell Tower tragedy, landlords and building owners across the UK have been assessing the construction of their building stock and particularly the external wall systems and fire safety of the same.
As part of those assessments, it is unfortunately not uncommon for landlords and building owners to find defects with the construction and design of their buildings in the context of fire safety. As such, remedial works are often needed and given the nature and context of the same, it can often be a complex and lengthy process not least because of the potential for legal claims against third parties that have to be considered. These issues have resulted in some leaseholders who occupy buildings being ‘trapped’ in them as they are unable to re-mortgage or sell them due to the concerns of lenders and/or prospective purchasers over these properties pending remedial works being carried out and completed.
The Welsh Government announced a ‘Leaseholder Support Scheme’ (‘the Scheme’) on 27 June 2022 to help those facing significant financial hardship because of fire safety issues affecting their properties.
The Scheme offers leaseholders advice and in some cases a solution to the financial concerns of such leaseholders, including in some circumstances the purchase of the relevant leasehold property. The Scheme will run for a two-year period, initially, starting from June 2022.
Leaseholders need to complete the ‘eligibility checker’ which provides an initial indication as to whether or not they may be eligible to apply to the Scheme. To be eligible, a leaseholder must;
- Be the owner of a property in an eligible building;
- Be an owner-occupier or a displaced resident (this is where there has been a need to move out because the property was unable to meet physical or occupancy needs, and due to an inability to sell due to fire safety concerns the leaseholder is now renting the property out);
- Pass the Financial Eligibility Assessment (where it is checked whether the leaseholder’s disposable income means falls into the Social Metrics Commissions’ definition of significant financial hardship because of fire safety issues).
The building must be 11 metres or higher and have recognised or potential fire safety issues which make the property unable to receive an accurate valuation for mortgage purposes. These fire safety issues will have led to increased service charges which have been passed on to the leaseholder.
Eligible leaseholders will receive advice from an Independent Financial Adviser (‘IFA’), with the costs covered by the Welsh Government and then be able to sell their property at a ‘fair market value’. If the IFA advises a buy-out is the best option, there is also an option to rent it back.
For more information, please contact Lee Russell.