EXCLUSIVE: Up to 750,000 landlords are caught up in cladding scandal, new data shows

Up to 750,000 landlords could be affected by the cladding scandal, a much larger figure than previously claimed, according to new research.

About 1.5 million flats are thought to have flammable building cladding or other fire safety-related issues and face huge repair bills or difficulties moving their mortgage to a different lender.

Credit ratings firm DBRS Morningstar’s study of 64 UK mortgage portfolios found that of 670,000 mortgages, 106,000 loans were on flats, with 49,000 of these on BTL properties.

Extrapolating these figures points to half of the cladding affected flats being owned by landlords.

DBRS found that due to the reduced resale value or the increased burden of funding fire safety repairs, borrowers potentially face higher monthly mortgage payments when re-mortgaging.

£140 a month

The increase in most cases ranges from £15 to £140 per month but could be much higher, for example if owners have to pay the lender’s standard variable rate.

However, it says fire safety repair bills are unlikely to vary as much as property values.

It reckons borrowers in North England with lower value properties could face large bills relative to their property’s value; a £35,000 repair bill works out to about 36% of the average property value for a flat in Newcastle but would be only 7% of the average West London apartment value.

If property values were reduced by £35,000 due to fire safety defects, only 0.3% of West London flat mortgages would be in negative equity compared with 56% of flat mortgages in Newcastle.

Last month, leaseholders in buildings under 18 metres were told they would have to stump up the full remediation cost to fix the cladding crisis. Government grants only cover buildings over 18 metres – a move the Leasehold Knowledge Partnership has labelled shameful.

Read more about fire safety changes.

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