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Lenders check tower block values post-Grenfell
Lenders are asking housing associations for reassurances over tower blocks being used to secure loans, as questions are raised over their valuation in the light of the Grenfell Tower tragedy.
The devastating fire at Grenfell Tower a month ago has thrown the value of existing tower blocks into doubt, at least in the short term, due to safety fears and the costs of necessary improvements. This could cause lenders to question the statuses of their loans to housing associations.
One lender told Inside Housing: “Valuers don’t want to be asked to provide valuation at the moment, because if you took a property to the market today, who would want to buy a high rise in the current climate?
“As a good custodian of our loans, we’ve gone out to organisations and tried to find out whether any properties that are part of our security have been reviewed as part of this.”
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If lenders were to decide that tower blocks were no longer valuable enough to act as securities on loans, they could hypothetically ask for cash security to replace them.
James Prestwich, head of policy at the National Housing Federation, said: “The government urgently needs to provide clear guidance on how housing associations can make their buildings safe. This is crucial to reassure their tenants, but also other stakeholders with whom housing associations work.”
The government has said it will fund improvements where landlords cannot afford to.
A housing association finance director said lenders had asked for information “but they’ve not suggested that they want to pull anything from charge or get anything revalued”.
They commented: “My sense is that if I was going into a market and securing new money, whether it be from the bank or the bond markets, and asking for a new valuation that included a tower block, there might be a consequence of what happened at Grenfell.”
A spokesperson for UK Finance told Inside Housing: “Lenders and UK Finance are engaging with government; and lenders are in bilateral discussion with their housing association borrowers to understand the extent of the issues and any funding implications that might arise.
“Lenders will be guided by their professional advisors in relation to the valuation of affected housing stock, but the industry is keen to adopt a measured and supportive approach with a focus on remedy.”
