A truly horrifying disaster such as that at Grenfell Tower was previously unthinkable (even if there warning signs). What are the consequences for the residential property market now?
Lending requirements in respect of tower blocks certainly, and potentially other residential property, will only be heightened; swiftly followed by insurers’ requirements, whose requests for stringent testing, regular reports on compliance/materials and safety checks will test what a landlord can reasonably be expected to produce in satisfaction. Cue also higher insurance premiums.
Individuals may impact the market substantially, particularly if there is reduced demand for leasehold property in high-rise buildings, or if landlords struggle to provide clear assessments of materials and evidence of compliance with regulations during construction.
Will individuals, and lenders, drive demand for a higher level of due diligence? Limitations on lending, particularly on older properties constructed when regulations were less demanding, would drive a further wedge between cash investment purchasers and owner-occupiers requiring financing.
Regulation-compliant constructions could themselves create a soar in their pocket of the market; developers cashing in on the sudden demand, selling stock to local authorities, social and private landlords, as well as individuals. Will lenders and insurers be more willing to support these developers, placing their investment in the ‘safer’ option?
The social housing sector could be set to benefit from ‘all eyes’ on the construction of high-rise buildings, with landlords ever more vigilant to compliance requirements and the stakes raised for developers who must now strictly comply with regulations, use compliant materials and consider more than just the cheapest options available.
The constant call for housing in the UK continues to challenge our residential market. Density is key. Limiting high-rise development is not realistic. The sector looks set to be hit by a wave of further demands.