THE GOVERNMENT is reportedly proposing flat owners take on 30 year loans ‘akin to a second mortgage’ to fix fire safety issues.

The Times reported on sources close to the Ministry for Housing, Communities and Local Government that claim its adviser – insurance executive Michael Wade – is ‘considering long-term loans’ as a solution to protecting leaseholders from ‘unaffordable’ costs ‘without burdening taxpayers further’. The news outlet added that this could mean ‘hundreds of thousands’ of flat owners could ‘be forced to take on 30-year loans akin to a second mortgage’ to fix issues.

It also noted that campaigners argued that such government proposals would leave leaseholders in negative equity, and would hit ‘those who can least afford it the hardest’ as developers, builders and freeholders of fire risk blocks ‘escape the burden’. The Times pointed out that around 200,000 high rise flats are wrapped in combustible materials, with 1.27m modern flats – or 5% of private homes in England – potentially ‘unmortgageable for years’.

A loan of £30,000 to fix a ‘typical mix of risky cladding, missing fire stops and flammable balconies’ would, the news outlet surmised, add around £1,500 per year to household bills at a 3% interest rate, with End Our Cladding Scandal’s Giles Grover noting that such loans would ‘hit those who could least afford it the hardest’. He added that this would also ‘disproportionately hurt leaseholders in the left-behind north of England, where property values are lower’.

The less that a flat is worth, he noted, ‘the bigger percentage of the value is wiped off’, but ‘the smaller your income, the bigger proportion you’ll have to pay in repayments’. Mr Grover also related to LBC his experiences of meeting Housing Secretary Robert Jenrick about the issue, stating that ‘it’s pretty much a talking shop. He just talked at us…for about 20-25 minutes, briefly listened to what we had to say, gave us the usual trite lawyers answers and we didn’t get any further.

‘We know there’s money out there but the money isn’t sufficient. The government knows that, the select committee knows that. Literally everyone knows that. But government just doesn’t want to help us out anymore. They’ve just stopped. We just need to force the hovernment to actually understand that the deadlines are impossible, the funds limited [and] they're not covering all issues’.

Nick Morrey of mortgage brokers John Charcol added that such loans risked pushing leaseholders living in lower value areas into negative equity, while The Times pointed out that ‘no penalties or levies have been imposed on developers or the manufacturers of flammable materials’. A proposal from the Leasehold Knowledge Partnership charity, via former Bank of England economist Dean Buckner, proposed the government lend funds for repairs to a special purpose vehicle.

This would then ‘lend for buildings to be fixed quickly’, and utilise mechanisms including annual levies on developers and freeholders paying interest to the government ‘at a rate of return comparable to gilts’, so that taxpayers would not have to fund it; Mr Buckner stating that ‘we’re saying: “Those who can pay should pay”’.

Leaseholder Hayley Tillotson was preparing to declare herself bankrupt because she can’t afford to pay the £15,000 required to fix combustible high pressure laminate cladding on her flat block in Leeds, adding ‘that’s more than I paid to buy it. I’m not buying two flats’. She had bought her £101,750 flat with a £10,000 deposit last year, but was told months later that a waking watch was required, and the bill for this exceeded her mortgage payments, emptying her savings.

Having been made redundant from her job, she added that ‘I wake up with night terrors. I’m crying five, six times a day. I’m just shattered. I feel sick. I feel stupid’. The news outlet noted that Building Safety and Fire Minister Lord Greenhalgh told the House of Lords last month that levies ‘do not raise very much, and you have to balance that with the need to build more homes’.

A spokesperson for the Ministry of Housing, Communities and Local Government responded: ‘We are considering a range of options to fund future remediation work and this work is ongoing - no decisions have been taken.’