Leasehold mortgages

Barclays

Building Safety Act 2022 Barclays has committed to helping customers where a property is being fully remediated by a Developer, Housing Association or Freeholder.

We also will support customers who qualify for a government scheme where they hold a qualifying lease. For applications being supported through the Building Safety Act, Barclays will review the evidence provided and provide confirmation that we are happy for the property to be valued. Barclays will only confirm that the valuation can proceed once we have validated to our satisfaction that the property meets the rules of the Act.

Where cladding remediation is needed and Barclays have indicated that lending has been approved: The property must be valued in accordance with the RICS Valuation - Global Standards, RICS Valuation – Global Standards: UK national supplement and RICS Valuation approach for properties in multi-storey, multi-occupancy residential buildings with cladding 1st edition.

In addition, Barclays require the following additional (special) assumptions to be made: Additional (special) assumptions specified by Barclays:

• Works required will cause a disruption to normal daily life for a period of 6 months to 1 year and that this may have a material impact on value.
• Where remedial works are necessary, it is assumed they will be completed within 10 years of the date of the valuation. Where information is not available, RICS guidance should be followed. We should assume a customer will not need to move out unless it is already confirmed. Additional Lending Scenarios: With the Building Safety Act in place, customers who are mortgaging a property with an adverse EWS1 rating will be able to apply to Barclays, provided they meet our policy and have the relevant documentary evidence. This evidence will be explained below. Customers buying a clad property should provide this when they apply for the mortgage. Where this is the case, it must be sent to our underwriting team for review and validation. Should the evidence not be provided at the point of application, when the case is valued a request for evidence will be raised or an EWS1 will be requested.

Barclays will allow applications from existing and new customers on properties where cladding remediation works have been identified as necessary and where works have been scheduled under one of the following schemes:

• Developer fully funded remediation
• Housing association fully funded remediation
• Government high rise (18m+) scheme (qualifying leases only)
• Government medium rise scheme(11-18m)(qualifying leases only)

Such applications must be accompanied by the following documentary evidence:

Developer fully funded remediation: § Evidence of the developer fully funding will be typically a letter from the developer on headed paper confirming the total cost and planned remediation dates (where available). § It may be possible you will be provided a contract which the developer has signed confirming to the government they are fully remediating the building which is also acceptable as an alternative.

Housing association fully funded remediation • Evidence will typically be a letter from the housing association confirming they will remediate the property in full and, where possible,this will give a total cost and a timeline for any repairs

Government high rise (18m+) scheme (qualifying leases only) or Government medium rise scheme(11-18m) (qualifying leases only)

• Evidence for the above schemes will always be 2 documents with accompanying evidence. The first document is the “Leaseholder deed of certificate” and the second is a “Landlord Certificate”
• For these customers there will in some cases be a cost to them to remediate non-cladding safety defects and it is important this is captured as a commitment within the mortgage application for affordability purposes.
• The Landlord Certificate will advise what monies remain to be paid and this is always taken over 10 years so the amount entered for affordability will be this figure divided by 120 months.
• When entering this cost into the application it should be captured as the amount obtained through the above step as a monthly service charge.

For all the above, wherever possible, we would also want the EWS1 paperwork for the property, although please note this is not essential to enable the case to proceed. All documents provided by the applicants will need to be attached to the mortgage application as per the above instructions so that the underwriting team can review/ validate them and approve the case to proceed, where the evidence supports. On receipt of the necessary evidence a decision regarding lending will be made by the senior underwriter team before a valuation (in line with the RICS published) is requested.

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