Publication - Factsheet

Ministerial Working Group on Mortgage Lending and Cladding: questions answered

Published: 19 Mar 2021

Answers to common questions following the Scottish Government's acceptance of recommendations from the Ministerial Working Group on Mortgage Lending and Cladding.

Ministerial Working Group on Mortgage Lending and Cladding: questions answered
Overview

Overview

Who are the Ministerial Working Group on Mortgage Lending and Cladding?

What was the problem the Group was trying to solve?

What is the Scottish Government’s priority for this work?

What did the Working Group say about the safety of buildings in Scotland?

What did the Working Group recommend? 

What is the Scottish Government’s response to the recommendations?

What did the Working Group say about legislation being needed?

Who are the Ministerial Working Group on Mortgage Lending and Cladding?

The Working Group was established in 2020 by Kevin Stewart MSP, Minister for Local Government, Housing and Planning.  The Group’s membership included representatives of affected homeowners and public, private, professional and commercial interests that could help develop solutions. External membership of the Group included representatives from:

  • Association of British Insurers
  • High Rise Scotland Action Group
  • Homes for Scotland
  • Law Society of Scotland
  • Property Managers Association Scotland
  • Royal Institution of Chartered Surveyors and surveying profession
  • Scottish Fire and Rescue Service
  • UK Finance and the mortgage lending industry

What was the problem the Group was trying to solve?

Since 2019 people across the UK, have experienced difficulties when trying to buy, sell, remortgage and in some cases, renewing insurance for domestic properties in buildings with external wall cladding. Some buyers, valuers and lenders have concerns about buying, valuing or providing finance for people to buy flats which could be unsafe or have potential remediation costs in the future.  Even when not trying to buy or sell, people have been affected by concerns about the safety of their homes.  In Scotland our system of property ownership has made the challenges more complex. People have faced  difficult circumstances, with some having had to change their life plans and deal with real concerns about safety, causing uncertainty and anxiety.

 What is the Scottish Government's priority for this work?

From the start both the Minister and the members of the Group have been clear that mortgage valuation and lending issues have arisen as a result of real safety concerns arising from the tragic events at Grenfell Tower.  Everyone involved in this work agrees that the approach must be to address these safety concerns. By addressing the safety of people and buildings, this in turn will lead to solutions which meet the needs of homeowners, borrowers, valuers and lenders for home buying and mortgage lending.

Fixing the valuation and lending issues therefore comes as a result of the safety first approach, which builds on previous work of Government through the Ministerial Working Group on Building and Fire Safety established after the Grenfell tragedy.

What did the Working Group say about the safety of buildings in Scotland?

The Group supported the need for affected buildings to be assessed against clear and robust criteria related to the fire safety of flatted buildings, including any cladding systems.  They also said that the Scottish Government should consider on an ongoing basis any further changes to systems, processes or enforcement that might be needed following the Single Building Assessment programme.

What did the Working Group recommend?

The Group was clear in its recommendations that solutions to mortgage valuation, lending or indeed building insurance difficulties should not be developed in isolation from the wider need for confidence in the safety of people and buildings and a clear path to remediation for affected buildings.

The Group recommended that ultimately the aim should be that an EWS1 (External Wall Systems 1 form) is no longer required for buying, selling, or remortgaging property and that need should instead be met through a new approach of a Single Building Assessment launched with funding from the Scottish Government.  This would help with some of the challenges homeowners and property managers have faced in securing agreement of co-owners, something that arises due to Scotland’s system of property ownership.

The outputs of the assessments should be used for multiple purposes including ‘green lighting’ buildings to release people from both safety and mortgage valuation and lending concerns allowing them to sell or remortgage.  The assessments should be done against a common and robust set of criteria and also to achieve a reliable and comprehensive basis for understanding the remediation needed.  Using this evidence, a remediation approach should address the identified need in Scotland and should come from a variety of sources, including public funds.

What is the Scottish Government’s response to the recommendations?

The Scottish Government has accepted all the conclusions and recommendations for resolution from the Working Group and, subject to the views of an incoming Government after the Scottish Parliamentary elections, will deliver them urgently and in partnership with others. You can read what we have said in our news release.

What did the Working Group say about legislation being needed?

The Group recommended that although government-funded Single Building Assessments should be adopted as a practical way forward, they thought that ultimately the Scottish Parliament will need to consider primary legislation to address the challenges of multiple owner agreement through creating a responsible person or duty holder.  The Group noted that this would not be straightforward with potential unforeseen consequences.  There is related work underway on tenement reform and the Group recommended that this work was accelerated if the evidence from assessment and remediation shows that there is an urgent safety need that cannot be met through the existing framework.

The Scottish Government will closely monitor the uptake of the Single Building Assessment programme and any challenges that arise for people in securing the necessary agreement of others to take part.  We will act quickly to bring forward resolution to any challenges.

Some of the legislative levers, such as intervention in financial services including insurance – are reserved to the UK Parliament and not the Scottish Parliament.