Fire regulation changes causing new-build transaction times to double
Changes to building fire regulations have significantly delayed new build sales in blocks above 18 metres, according to new home specialists, Stone Real Estate.
All sales across the eight major developments in this category currently listed by Stone Real Estate have seen the time period between reservation of a property and the exchange of contracts delayed by at least double the usual time frame, and in some cases, much longer.
But this isn’t restricted to Stone Real Estate, industry-wide developers and agents are falling over themselves to gain the necessary approvals in order to progress their sales through the final stages.
Responding to Grenfell
Changes to the Building (Amendment) Regulations in December 2018 restricted combustible materials contained in the external walls of builds in England.
The alterations came after the horrific events of Grenfell Tower, where a fire broke out in North Kensington, London, in July 2017 and caused 72 deaths and more than 70 injuries.
The changes in detail
After the changes, the valuer requires a letter confirming that materials have been tested. This letter needs to be dated, signed and have the applicant’s name and the property listed on it.
Qualifications need to be listed in the signature, while the statement must be completed by a certified professional body.
Any cladding system must achieve compliance with The Building (Amendment) Regulations 2018.
Meanwhile, confirmation is needed that the property meets the requirements of guidance from the Ministry of Housing, Communities, and Local Government (MHCLG).
However, while this was implemented at the end of last year, it was only filtered down by mortgage lenders in July of this year and has caught many, if not all, completely unaware. While it has had little impact on buyer demand for new build homes, with the number of reservations for properties in the sector remaining strong, it has had a considerable impact on the time it is taking to progress each sale from the point of reservation to the exchange of contracts.
Founder and CEO of Stone Real Estate, Michael Stone, commented:
“There is absolutely no doubt in anyone’s mind that this legislation was needed and these tighter rules and regulations around fire safety have been welcomed industry-wide.
However, I think the speed at which it was introduced due to the urgency of the issue resulted in a lack of prior-warning and implementation of new procedures to cope with these changes.
The result has been a sizeable bottleneck of applications at the point of reservation and a slowdown in the number of sales progressing from this point to completion.
Not only has it caught many in the industry by surprise, but new-build homebuyers remain blissfully unaware that if their development of choice is yet to receive the correct certification, there will be a notable delay in the time taken to secure a mortgage offer.
The good news is that this seems to be a temporary issue and once the initial surge has subsided, things should return to normal very quickly.
Unlike the regular market, buyer appetite is alive and well and we have the properties to satisfy it, we just need to overcome the initial teething issues caused by these changes.”