The government has agreed to virtually wipe out a help-to-buy loan on an apartment in a London block with cladding similar to that used at Grenfell Tower, it has emerged.
It will make the write-down on the grounds that the value of the flat in Greenwich has been reduced from £500,000 to £50,000 because the developer has no plans to remove the cladding.
The concession raises the prospect of multimillion-pound losses for the government scheme on any flat that goes into negative equity. This is because, unlike high street mortgages, help-to-buy loans can be redeemed on the sale value of the property rather than the value of the original loan.
