Some lenders stand by the belief a form is needed in order for them to lend, although guidance issued by RICS in March said they would not be required for buildings taller than 18 metres with a valid building control certificate.
Properties which are five or six storeys tall with either no visible cladding or cladding that covers less than a quarter of the building are also exempt, according to the guidance.
However, government advice issued to building owners in January last year states properties of any height need to be assessed for the presence of cladding. This means there is no certainty regarding the safety of buildings which have not yet gone through the process.
Additionally, RICS’ recommendations do not validate buildings which appear to be built by stones or bricks but in fact, have a brick or stone slip external wall system which includes cladding. The possibility of combustible materials being used in decorative panels between floors and walls is also uncertain without an inspection.
Remediation costs can potentially affect the value of a property as well, so RICS acknowledges that “lenders are unlikely to lend until remedial work has been completed, but some may choose to do so with retentions and the like based on their own risk appetite”.
Although lenders are encouraged to adopt RICS’ proportionate guidance to lessen the number of requests for an EWS1 form, UK Finance also admits “this is a decision for each lender to make based on their own risk appetite”.
As a result, the final judgement on whether a form is required ultimately lies with lenders and brokers are having a tough time trying to influence opinions.
Unsuccessful challenges
Nicola Schutrups, managing director of The Mortgage Hut, said her firm’s attempts to overturn EWS1 form decisions had been unyielding.
She said: “We have had a client who we put in an application for with Halifax and we’d already completed on a couple of properties within the same development using the EWS1 form.
“But then, the particular surveyor on this case wouldn’t accept the EWS1 form that had already been used on other properties within the same block.”
There was no way around the decision even after going through the business development manager (BDM), Schutrups said. The client ended up paying for a new form as the developer refused to issue another one, as other properties had completed using the existing document.
“It’s just a bit of a grey area, who’s responsibility it is. The freeholder is obviously trying not to spend money. It’s the leaseholder who’s normally desperate to sell the property and it’s our client who’s trying to buy.
“So, we have seen some cases where the client ends up paying and then some where the leaseholder has tried to get it done but then has restrictions because obviously, it’s on the whole property. So, it’s all just been a bit of a mess,” she added.
Jane King, director and mortgage adviser at Ash Ridge, also tried to challenge the decision made on a property under 18 metres. She was told it was “standard practice for [the lender] to request the form in respect of wall insulation materials and nothing to do with cladding”.
RICS guidances also suggests forms may be requested for buildings under 18 metres as properties of four storeys or fewer may have the “most dangerous types of cladding present”.
Managing partner at Boon Brokers, Gerard Boon’s attempts have also been futile and resulting in rejections for cases where a form has not been produced.
“The lenders that have declined our cases for that reason are adamant that from their interpretation of the legislation around EWS1 forms, it is a requirement in order for them to lend,” he added.
Some lenders such as Santander are taking a more flexible approach, he said, and instead are asking building managers a series of questions around the construction of properties so they can proceed with that knowledge.
“There are very few lenders in the market that currently share this policy with Santander,” he said.
Seeking help
Stephanie Charman, head of strategic relationships, lender at Sesame Bankhall Group, said assistance could be available through network and club helpdesks.
She said Sesame’s lender relationship team was able to support brokers by using the “strength and breadth” of its relationships to get involved where EWS1 forms were being requested unnecessarily.
Charman said: “We have an established process for adviser and customer cases that require escalation to lenders, regardless of the issue. In the case of a EWS1 form, the process would involve discussing the detail of the property with the adviser, along with the reason why they feel the EWS1 form is not required.
“Before approaching the lender, we would do additional checks against the RICS guidance and individual lender criteria. We would then escalate the case through our lender relationship team, with a view to addressing the adviser’s concerns, requesting that the case is reviewed based on the reasons why we feel the form is not required.”
She added: “We sometimes find that there’s information the adviser has not been made aware of, which has impacted on the lender or valuer’s decision. We’re not always able to overturn a lender’s decision, but we’ll endeavour to support the adviser and their customer to get the right outcome for all parties.”
She also pointed to RICS’ ‘frequently asked’ section on its website, saying advisers and borrowers can find more information on what kinds of properties would require EWS1 forms and clarify why some decisions might be made.
“Whilst lenders have now adopted this new guidance, there can be instances where confusion might still arise on some properties,” she added.
