Parkside Mortgages

Will Cladding Affect the Value of My Property

The issue of cladding has become a significant concern for property owners and potential buyers in the UK, particularly in the wake of the Grenfell Tower tragedy in 2017. Cladding can impact a property’s value, safety, and marketability. This article explores how cladding affects property values in the UK, considering various types of cladding and the current regulatory environment.

Understanding Cladding

Cladding refers to the external layer applied to buildings to provide thermal insulation, weather resistance, and aesthetic enhancement. It can be made from various materials, including wood, metal, brick, vinyl, and composite materials. While cladding can improve a building’s appearance and energy efficiency, it has come under scrutiny for its role in fire safety.

Types of Cladding and Their Impact

1. Combustible Cladding

Combustible cladding materials, such as Aluminium Composite Material (ACM) panels with polyethylene cores, have been identified as high-risk due to their potential to spread fire rapidly. The presence of such cladding can significantly decrease property value and marketability, as buyers are wary of safety issues and potential remediation costs.

2. Non-Combustible Cladding

Non-combustible cladding materials, like brick and stone, do not pose the same fire risks and are generally seen as safer. Properties with non-combustible cladding are less likely to be affected negatively in terms of value, assuming other aspects of the property are in good condition.

Factors Influencing Property Value

1. Safety Concerns

The safety of cladding materials is a primary concern for buyers and lenders. Properties with known combustible cladding materials face significant devaluation due to the perceived risk and the potential cost of remediation. In some cases, properties with unsafe cladding may become unmortgageable, further reducing their marketability.

2. Remediation Costs

The cost of removing and replacing unsafe cladding can be substantial, often running into tens or even hundreds of thousands of pounds. If a property requires cladding remediation, the associated costs can deter buyers, leading to a lower market value. Property owners may also face increased service charges to cover remediation expenses.

3. Mortgage and Insurance Challenges

Lenders and insurers are increasingly cautious about properties with certain types of cladding. Securing a mortgage or insurance for a property with combustible cladding can be challenging, further affecting the property’s value. Mortgage lenders often require an EWS1 (External Wall System) form to confirm the safety of cladding before approving a loan.

4. Government Regulations and Support

Government regulations and support measures also play a crucial role in property value. The UK government has introduced several initiatives, such as the Building Safety Fund, to help cover the costs of removing unsafe cladding. Properties eligible for such support may see less impact on their value compared to those where owners must bear the full cost of remediation.

Practical Steps for Property Owners

1. Obtain an EWS1 Form

If your property has cladding, obtaining an EWS1 form can provide clarity on its safety. This form, completed by a qualified professional, assesses the fire safety of the external wall system and can reassure buyers and lenders about the property’s condition.

2. Stay Informed on Regulations

Keep abreast of the latest government regulations and support schemes related to cladding. Government initiatives can offer financial assistance for remediation and improve the marketability of affected properties.

3. Engage with the Freeholder

If you own a leasehold property, engage with the freeholder or managing agent to understand their plans for cladding assessment and remediation. Collaboration can help ensure that necessary safety measures are taken promptly.

4. Consider Professional Valuation

If you plan to sell a property with cladding concerns, consider obtaining a professional valuation. A valuer experienced in dealing with cladding issues can provide a realistic assessment of the property’s market value and advise on how to address potential buyer concerns.

Conclusion

Cladding can significantly affect the value of a property in the UK, particularly when it involves combustible materials. Safety concerns, remediation costs, and challenges with obtaining mortgages and insurance are key factors that influence property value. Property owners should take proactive steps to assess and address cladding issues, stay informed about regulatory changes, and seek professional advice to navigate the complexities associated with cladding. By doing so, they can help mitigate the impact on their property’s value and marketability.

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