Feb

BREAKING: Landlords now covered by cladding fund – but NOT portfolio operators

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Landlords who own flats hit by the cladding scandal will be covered by the remediation fund, the government has announced.

However, portfolio landlords have been left out, with property experts suggesting that this omission will mean work will be held up and their flats could become unsellable.

Last month, it was suggested that landlords would not be included in the fund, but in an amendment to the Building Safety Bill, the government now plans to protect leaseholders who live in a property as their principal residence and accidental landlords – those who do not live in the property, but do not own any other residences, or who own only one other property. Overseas landlords who own one or two properties in the UK will also be covered.

A Department for Levelling Up, Housing and Communities spokesman tells LandlordZONE: “We committed to covering those who sub-let properties. These clauses announced go a bit further.”

However, many in the sector say that excluding many landlords will block building repairs and make flats unsellable. In cases where the developer or the freeholder cannot afford to cover the costs of non-cladding works, flat owners will have to cover the cost of works up to a cap of £10,000 (£15,000 in London).

Portfolio landlords

Portfolio landlords make up a significant proportion of a building’s leaseholders in some city centre blocks, which means there will be long delays for works to remedy fire safety defects because leaseholders will be dependent on landlords’ ability to pay huge bills.

Experts have warned that even though owner-occupiers in buildings with a large share of landlords would be protected from the costs, their flats would therefore remain un-mortgageable, unsellable and devalued until all works were complete.

It could also stop property investors from being able to sell. Under the new legislation, a buyer purchasing a flat from an owner-occupier would also be protected from the cladding costs and the non-cladding cap.

But a buyer purchasing a property from a portfolio landlord would take on a lease that had no cladding cap protections attached to it, even if the buyer was purchasing as an owner-occupier, according to Giles Peaker of Anthony Gold solicitors.

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