Taxpayer ‘faces multimillion-pound Help to Buy losses’ on cladded towers

Graham_Devon

The government could be forced to write off millions of pounds of taxpayers!!!8217; money invested in Help to Buy loans on a south-east London block amid a row over cladding removal, an MP has warned.

While not writing off the loan, the HTB scheme have already agreed to accept 90% less than the loan on one flat in London - was a story on here not long back, where a HTB flat had reduced in value from £500k to £50k.

Was only one way this was going to go once they agreed it to one buyer. Still leaves the buyer in a complete mess though.

How we got to this stage is beyond me (i.e. the buyer being left with the cladding issue). It's an appalling state of affairs, which, now, the taxpayer is also on the hook for.

Personally believe it's the right decision. But I doubt it will be the last of the reasons to write down HTB loans.

980 homes with this cladding on, in that one London borough alone. That's a hell of a lot of properties that are now worth 90% less than what they were bought at.

https://www.insidehousing.co.uk/news/news/taxpayer-faces-multimillion-pound-help-to-buy-losses-on-cladded-towers-56573

Graham_Devon

On another HTB note.... the RBS shares sale proceeds (i.e. loss) is going straight into extending HTB...

Critically, the government plans to sell £15bn worth of RBS shares by 2023, with the revenue earmarked to help fund the extension of the government!!!8217;s Help to Buy programme. This is a scheme that the government!!!8217;s own Social Mobility Commission has found largely benefits the already wealthy and increases house prices. In other words, we are selling off strategic assets on the cheap to fund a policy that worsens affordability of housing for many, deepens wealth inequalities and exacerbates the very trends of over-leverage and excessive debt that lead to the financial crisis in the first place.

https://www.independent.co.uk/voices/rbs-shares-sold-government-housing-policy-fun-inequality-theresa-may-a8384176.html

michaels

Bank shares are not a strategic asset. Neither are they being sold on the cheap - what the labour govt paid for them has zero baring on their value now.


However I 100% agree with you that help to buy seems like a very odd way of intervening in the housing market.

GreatApe

This is nonsense the cladding can be fixed to something non combustible and the full market price achieved. The loss need not be -90% it can just the the cost of replacing cladding or even just fitting a sprinkler system or other measures

Also most homes can catch fire and almost every type does. That does not mean homes are valueless

Regarding help to buy, it is a fix for a government/banking f.up
Banks should be free to loan 100% mortgages at non punitive regulation costs to prime borrowers
That way the young could buy without any odd government schemes which are in effect a round about way to get over the costly regulations

stator

So basically the home owners are exploiting the grenfell disaster for their own personal gain by ripping off the tax paper. Someone has worked out that by revaluing his home before the cladding is removed, he can pay off the Help To Buy loan at 10% of it's value and therefore massively increase his LTV when the cladding is finally sorted in a few years time

Graham_Devon

GreatApe wrote: »

This is nonsense the cladding can be fixed to something non combustible and the full market price achieved. The loss need not be -90% it can just the the cost of replacing cladding or even just fitting a sprinkler system or other measures

It is nonsense. The trouble is, who pays?

The buyer? The builder? NHBC? The taxpayer?

The buyer would say they didn't know and expected the system to be regulated to protect them. The builder would just state it passed inspection (which is what they are doing). NHBC would blame the regulation itself for having holes in it.

So it's most likely the taxpayer will stump up somewhere down the line for the costs of re cladding. We are already stumping up for the HTB losses, though as everyone will know, I'm hardly surprised. Main problem I have here is that it was the builder groups who lobbied the government in the first place to ensure regulation was less than that of our EU counterparts.

It's just one story of many which shows the poor quality we receive from all levels in this country.

Of course, this will extend to non-HTB homes too, and I would expect those people have an even shorter leg to stand on, simply as there is no government loss or involvement.

Keep looking to do stuff on the cheap, and we will keep getting problems - PFI told us that.

lisyloo

I haven't had time to research the articles but aren't the contractors who put the cladding in place liable and wouldn't they have insurance??


When I paid for my solar panels I made sure that the insurance in place was not dependant on the supplier staying in business.



Why is there no insurance in these cases?
Or was that a lack of due dillegence too?

chucknorris

lisyloo wrote: »

I haven't had time to research the articles but aren't the contractors who put the cladding in place liable and wouldn't they have insurance??


When I paid for my solar panels I made sure that the insurance in place was not dependant on the supplier staying in business.



Why is there no insurance in these cases?
Or was that a lack of due dillegence too?

I don't think insurance companies would pay out for contractors using 'unsuitable' cladding, and I don't think that the contractors would be responsible, unless it was a design and build project. But it might be possible that architects could be sued, and they in turn claim on their PI insurance though.

westernpromise

If the standards have been observed but the standards are dangerous and now need to be redetermined, such that existing buildings need to be retrofitted, the culpability lies with whoever originally determined the defective standards.

As this will be someone in the public sector, and the public sector has constructive personal and corporate immunity from prosecution for murderous incompetence (see Jean Charles de Menezes), nothing will happen to anyone.

lisyloo

chucknorris wrote: »

I don't think insurance companies would pay out for contractors using 'unsuitable' cladding

Part of the point of insurance is to cover negligence.


I have it as a housholder.
We are forced to have it if we want to drive a car.

My partner has it as a business providing services (the comapnies that contract his services insist on it).


So why wouldn't negligence be insured in this case?

lisyloo

westernpromise wrote: »

If the standards have been observed but the standards are dangerous and now need to be redetermined, such that existing buildings need to be retrofitted, the culpability lies with whoever originally determined the defective standards.

As this will be someone in the public sector, and the public sector has constructive personal and corporate immunity from prosecution for murderous incompetence (see Jean Charles de Menezes), nothing will happen to anyone.

OK, I see it depends on the detail of what actually happened.


But if a private contractor was at fault would it not be reasonable to expect the public sector should have insisted they were insured? (for neglignce and to cover their liabilities if they went out of business - seems kind of obvious to me and I'm just a householder).