Homes England scraps ‘unviable’ scheme to secure valuations for Help to Buy cladding victims

Despite touting it as a route out for leaseholders earlier this year, Homes England said that, after speaking to the RICS, it decided this option was unviable and any customers who have paid the fee will be refunded.

This is the latest hurdle faced by Help to Buy homeowners caught up in the building safety crisis.

Earlier this year, an Inside Housing investigation revealed that the government agency had moved the goalposts around its flagship homeownership scheme repeatedly, to try and protect itself from losses caused by cladding victims trying to redeem their loans.

The Help to Buy loan scheme was launched in 2013 to support buyers onto the property ladder by providing government-backed loans of 20% of the equity of a property, or 40% in London.

Under the terms of the scheme, the government takes the profit if the value of a property rises, but can lose money if the value drops significantly. This was the case with many blocks that have cladding issues.

This has led to concerns that the government could be on the hook for millions of pounds in losses if homes are sold or loans are redeemed at these much-reduced values.

A number of leaseholders who are desperate to leave their homes have attempted to redeem. Homes England initially advised them that ‘specialist surveyors’ could be found at a cost of £1,500.

It has been difficult to find surveyors willing to carry out a valuation, because these surveyors have struggled to secure professional indemnity insurance. There has also been reports from surveyors that it is hard to get valuations accepted by Homes England even if they complete them.  

To compound the problems for Help to Buy cladding victims, the rules of the scheme mean they must begin paying interest on their loan in the sixth year. Some are now paying as much as £450 a month. With this increasing by the Retail Price Index + 1% every year, this is expected to leap dramatically next April.

As part of its plan to overcome the problems around valuations, Homes England set up a scheme in which leaseholders could pay £450 and get the president of the RICS to pick a ‘specialist valuer’ to value a property.

Inside Housing spoke to leaseholders who have opted to go down that route. Some have yet to have a surveyor appointed and others have been left completely in the dark over the status of their application.

One leaseholder Inside Housing spoke to issued her request to the RICS in January, paying £425 at the time. After waiting more than six months for the valuation to be carried out, she paid the surveyor more than £2,800, taking her total costs (including interest payments) for the Homes England-advised route to more than £4,000.

She received her valuation in late August, which deemed the property to be worth £332,000. The leaseholder had initially paid £476,000 for it. The surveyor said that this was partially due to a 20% deduction because of the presence on the east London block of cladding deemed to be unsafe.

However, since submitting her valuation and redemption request to Homes England, she has yet to receive an update from Homes England or Target, the company contracted to manage Homes England mortgages. Instead, she has just been told the valuation is under review.  

In its investigation into the Help to Buy scandal in June, Inside Housing revealed a number of leaseholders looking to redeem had been left in the dark over redemption attempts, with many criticising Homes England’s customer care.

The leaseholder said the situation was “infuriating and absurd” and that it had been nearly a year since she first put her request in with the RICS.

The mother of one, who is looking to move to get more space for her family, said: “I have jumped through all of their hoops and spent a significant amount of money to do so. I don’t understand why they are still reviewing my valuation nearly two months after they received it.

“If it were a bank (rather than the government) preventing a customer from paying off a loan when they had done everything required under the terms of the loan, thereby trapping them in debt and forcing them to keep paying interest, it would not be acceptable.” 

In correspondence sent last month to one group of leaseholders who have spent £900 on the RICS route, the body confirms that the process is no longer available and that they would be offered a refund.

According to a response to a Freedom of Information request, only one person had been successful through the RICS-president scheme since its inception. However, Inside Housing is aware of a handful of people who have paid the £450 fee.

One leaseholder told Inside Housing that Homes England recommended the RICS route to him, after an initial valuation was rejected. 

After paying the £450, which was sold as non-refundable, the leaseholder waited months without receiving a response from Homes England, Target or the RICS. The leaseholder, who is currently paying £300 interest per month, was only told the route had been closed last month. 

The leaseholder, who wants to move to start a family, said that he and his partner were “prisoners in their own home” and the process has resulted in anxiety issues, sleepless nights and him having to take time off work for stress. 

He added: “We’re left feeling trapped, and hopeless. A government scheme designed to help us is destroying us. Any help on [to] the ladder has been well and truly undone through the interest alone. No one seems to care, though.”

Campaign groups have previously called for Homes England to scrap interest payments for leaseholders trapped in cladding-affected blocks, but so far, these requests have fallen on deaf ears. 

In a response, Homes England acknowledged that those leaseholders with building safety issues, such as unsafe cladding, face additional challenges in getting accurate valuations. It said it continued to explore solutions to overcome this, and the RICS route was one of these.

It said: “Unfortunately, having spoken to RICS, it is clear that, at this current time, this option is not viable and any customers who have paid this fee will be refunded.”

It confirmed that it did not have any direct access to appropriate valuers to help customers who are trying to find one.

It said: “We are currently working with the Department for Levelling Up, Housing and Communities and RICS to try to find ways to help customers, including potentially unlocking more valuation options for them in the future.

“We realise this does not help customers now who have started their redemption process and are temporarily unable to make progress, but we can assure them we are working hard to resolve the situation as soon as possible.”

A spokesperson for the RICS said: “RICS are committed to working with Homes England to develop a process that is fit for purpose, and that our valuers can fulfil the criteria for and are able to gain insurance for.  

“We are working with them to ensure people can get these valuations completed.”