The new scheme is the result of a collaboration between the Department for Levelling Up, Housing and Communities (DLUHC), and insurers MGAM, SCOR and Aon.
It has been launched in response to the shortage of insurers willing to provide PI cover to property surveyors who carry out the checks on cladding and other external wall systems in mid- and high-rise buildings. The government confirmed back in July that it was looking to launch a state-backed scheme.
EWS1 forms ‒ which cover these checks ‒ were developed by the Royal Institution of Chartered Surveyors, UK Finance and the Building Societies Association following the Grenfell disaster, in order to assist with the valuing process for high rise buildings with cladding.
However, the situation has become untenable, with owners of leasehold properties facing huge delays in having their properties assessed, making it all but impossible to secure mortgage finance and go through with purchases or sales of the properties.
Earlier this year, RICS updated its EWS1 guidance, which it said would make it more transparent and easier to access.
The new scheme will run for five years, at which point the government believes that insurers will once again be active in the market, removing the need for a state-backed option.
Leaseholds ‘in limbo’ for too long
Paul Scully, minister at the DLUHC, said that for too long leaseholds had been “stuck in limbo”, unable to secure mortgages, sell up and move onto their next property.
He continued: “It is for these leaseholders that we have launched this new indemnity scheme today and I thank our partners for helping make this a reality. This scheme will give EWS1 assessors the confidence to exercise their professional judgement, speed up the sale of flats and allow lenders to lend with confidence.”
This was echoed by Julie Page, CEO at Aon, who said that the new scheme addressed an important “protection gap” in the market.
“The solution itself will also help alleviate the pressure on a significant proportion of affected leaseholders who are currently unable to sell or re-mortgage their properties – and allows us to play a part in addressing issues impacting people’s lives.”
