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Lloyds lent on more flats in 2020 than in 2019 despite ongoing cladding crisis

Jake Carter

April 13, 2021

Lloyds Bank, which lent on more flats in 2020 than it did in 2019 despite the ongoing cladding crisis, has welcomed recent guidance on lending on such properties.

The banking giant said it continues to actively lend on flats in buildings with cladding whilst taking a risk-based approach and said it hopes guidance from the Royal Institute of Chartered Surveyors (RICS) will encourage other lenders to do the same.

RICS guidance titled ‘Valuation of properties in multi-storey, multi-occupancy residential buildings with cladding’, was released last month following consultation with valuers, lease-holders, lenders fire safety experts and government.

As of 5 April, the guidance, which clarifies what types of properties will, and will not, require additional inspections due to concerns about fire safety, is effective.

This should reduce the number of homeowners becoming mortgage prisoners as a result of the requirement of an EWS1 form.

The ESW1 form designates whether the external wall of a building, or attachments to the external wall such as cladding, are at low risk for fire.

It was introduced as part of a new External Wall Fire Review process valuing high-rise buildings.

A report from Irwin Mitchell titled ‘Cladding: A Way Forward’, estimates that two million people are ‘mortgage prisoners’ due to cladding issues, while 600,000 are currently living in high-rise buildings with dangerous cladding.

Rather than a blanket requirement for flats to need an EWS1 form, RICS’ guidance makes clear that where a valuer or lender can establish that the building owner has met the advice in the consolidated advice note, an EWS1 form should not be required.

A spokesperson for Lloyds Bank, said: “We welcome RICS’ guidelines which should provide much-needed clarity and consistency for lenders, surveyors and homeowners.”


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