Government scraps EWS1 forms for buildings under 18 metres
The statement from Robert Jenrick follows advice from fire safety experts in a review that was commissioned by the government earlier this year.
The review found there was no systemic risk of fire in medium and low rise-buildings.
It said fire risks should be managed where possible through measures such as alarm systems or sprinklers but analysis showed the majority of buildings under 18 metres did not require expensive remediation.
It found there was a downward trend in the number of residential fires in England, with 91 per cent taking place in houses, bungalows, converted or low-rise flats, while blocks of flats of four storeys or more accounted for nine per cent of incidences.
HSBC, Barclays and Lloyds Banking Group are among the banks expected to amend their practices in line with the new advice.
The Responsible Person for all blocks of flats will continue to have a legal duty to ensure properties have an updated fire risk assessment to identify issues and the need for remediation. This will include the installation of sprinklers, alarms and in extreme cases, the removal of flammable materials.
To help with this, new guidance for the risk assessment of external wall systems will be introduced. The PAS9980 fire risk assessment will ensure inspections are proportionate to risk and actions are cost-effective. The Consolidated Advice Note which was published in January last year will be withdrawn.
For buildings under 18m which do require remediation, the government will still offer a financing scheme which will see leaseholders pay no more than £50 a month to replace unsafe cladding. Details of the scheme are expected to be announced soon.
Developers to pay for historic defects
The government has also set out plans for developers of high-rises in England to contribute to the cost of remediating these buildings.
A consultation published today said a levy will be applied when developers seek permission to build certain high-rise residential buildings of 18 metres or more in height.
The money generated will contribute towards fixing historic fire safety defects, including unsafe cladding. The government said this would protect leaseholders and taxpayers from taking on the burden of costs.
The government is calling for views on the proposed design of the levy, which was first announced earlier this year.
It has also been confirmed that the Building Safety Fund will reopen for applications in autumn for any eligible buildings that missed the original deadline in June.
Jenrick said: “Today’s announcement is a significant step forward for leaseholders in medium and lower-rise buildings who have faced difficulty in selling, anxiety at the potential cost of remediation and concern at the safety of their homes.
“While we are strengthening the overall regulatory system, leaseholders cannot remain stuck in homes they cannot sell because of excessive industry caution, nor should they feel that they are living in homes that are unsafe, when the evidence demonstrates otherwise.”
He added: “That’s why I commissioned an expert group to further examine the issue, and have already agreed with many major lenders that lower-rise buildings will no longer need an EWS1 form, and the presumption should be that these homes can be bought and sold as normal.
“We hope that this intervention will help restore balance to the market and provide reassurance for existing and aspiring homeowners alike. The government has made its position very clear and I urge the rest of the market to show leadership and endorse this propionate, evidence based, safety approach.”
In a joint statement, UK Finance and the Building Societies Association, said: “Flats should be safe places to live, so we welcome the government’s expert panel view that there is no systemic risk from fire in medium and lower rise blocks.
“We also welcome the actions the government has outlined today, including the withdrawal of the current Consolidated Advice Note on cladding, and urge them to continue to work with relevant stakeholders to ensure all documents, including the RICS guidance, align with the views of the expert panel.
“Once these changes are made both borrowers and lenders should be in a clearer position and know what is expected of them.”
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Product changes also dominated, including Santander’s update to its proof of deposit criteria and TSB’s removal of higher fee remortgages. The Bank of Ireland’s decision to cull its mortgage sales team was also among most read this week.
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London mayor urged to block funding for developers not supporting cladding-hit leaseholders
The motion, proposed by member of the London Assembly Hina Bokhari, also requested for the establishment of a fire safety victims support hub and the trial of a public fire safety risk assessment register in the capital.
The register will be similar to the Energy Performance Certificates and enable prospective buyers or renters to see the fire safety rating of a home.
Additionally, the mayor was asked to ensure both Building Safety Fund and Waking Watch Relief Fund applicants hear back from the Greater London Authority regarding their applications in a timely manner.
The Assembly is also lobbying the central government to remove the burden of remediation costs from leaseholders.
Bokhari said: “We need to listen victims of this crisis and represent their needs.
“Of course the government needs to do more to comprehensively deal with the building safety crisis, and many of us will keep pushing for this. Yet it is too easy just to call on the government. We need to look at the levers and powers the mayor has to ensure far more is done to support those affected by this shameful scandal in London.
She added: “With an affordable housing budget of over £4bn the mayor could send a clear message to developers by refusing to work with those who are yet to take action to remediate fire safety issues in their existing stock. There are numerous other actions the mayor could take to support leaseholders.
“We need the mayor to couple warm words with action. As well as lobbying government he needs to use his powers and levers to their full extent to give practical support to the thousands of Londoners impacted by this terrible scandal.”
EWS1 lender requests still a ‘grey area’ and ‘mess’ despite updated RICS guidance – analysis
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.
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.
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.
More time may be permitted for Building Safety Fund applications on ‘case by case basis’ – Pincher
The £1bn fund, which was introduced as part of the March budget last year, aims to support the remediation of unsafe non-ACM cladding on residential buildings that are 18 metres and over.
In December the deadline for applications to the fund was extended to 30 June this year, with the ‘start on site’ date moving to 30 September 2021.
The Secretary of State for Housing, Communities and Local Government Christopher Pincher (pictured) said that the timelines for the fund were “intended to incentivise building owners to speed up plans to identify and remediate unsafe buildings” but that meeting the deadlines may not be possible.
He explained: “The deadlines for the fund have been set based on what we know about registrants and their readiness to be able to deliver projects. We recognise, however, that meeting these deadlines may not be possible in all circumstances, for instance where applicants find that they do, in order to meet the 30 June deadline, to submit full applications for grant funding.”
Pincher added: “More time may be permitted on a case-by-case basis, providing applicants continue to keep delivery partners fully informed and provide them with realistic timetables.”
However, he urged registrants to continue to “maximise the pace of remediation” so “remedial works are carried out as soon as possible”.
He also reiterated the government’s pledge in February for an additional £3.5bn funding to rectify non-safe ACM cladding.
Pincher added that the government was currently working on the details of a finance scheme to compensate leaseholders in buildings of between 11 and 18 metres in height.
He said: “We are working to develop the underpinning details of the finance scheme to ensure it protects leaseholders, prioritising affordability and accelerating remediation. Further detail on the finance scheme will be made available as soon as possible.”
The industry has criticised the government previously for not providing an actual timeline to remove cladding. This is despite repeated warnings form the government to building owners, including naming and shaming building owners who have not fixed cladding.
Analysis from the Labour party earlier this month revealed that cladding remediation could take 22 years.
It noted that between May 2020 and April 2021 an average of eight buildings a month had had their cladding removed, and a further 2,017 were on the waiting list.
Cladding guidance frees almost 500,000 homeowners from EWS1 form, minister says
Responding to a written question, Housing minister Christopher Pincher (pictured) said his department estimated than nearly 500,000 leaseholders should not need to supply the form following the publication of the March guidance from the Royal Institute of Chartered Surveyors (RICS) which clarified exactly which property types required the EWS1 cladding certificate.
RICS stepped in to curb unnecessary requests from mortgage lenders that were unclear of which building types and cladding materials triggered the need for an EWS1 to be completed.
Pincher added: “Most major lenders, representing roughly 80 per cent of the mortgage market, have said that they will adopt the RICS guidance, or already take a markedly less risk-averse approach.
“Recent data from one major lender suggests that an EWS1 already exists for 50 per cent of mortgage applications where one is requested, and we are working with industry to ensure this picture only improves.”
Pincher said the government continued to challenge the industry on its use of the EWS1 process and data has been requested to highlight how the RICS guidance is being applied and how that impacts the mortgage process.
The new RICS guidelines spell out when an EWS1 form is needed.
Buildings of any height with high pressure laminate (HPL) cladding warrant an EWS1 form, a requirement which was not included in the original guidance.
Buildings which are five storeys or higher with combustible cladding with balconies that are linked or vertically stacked with combustible materials such as timber will also need a certificate.
For buildings over six storeys, an EWS1 form will be needed if there is cladding or curtain wall glazing.
Meanwhile, for buildings of five or six storeys, a certificate is required where there is significant cladding, which is confirmed by RICS as approximately one quarter of the whole elevation.
A certificate is also required if there is HLP, metal composite material (MCM), or if aluminium composite material (ACM) panels have been used.
For buildings of four storeys or fewer, a form is needed if there are ACM, MCM or HPL panels present.
Properties which are five or six storeys tall will not need to be inspected if they do not have ACM, MCM or HPL cladding or if any cladding used covers less than a quarter of the building.
The guidance also said if a lender or valuer is sure a building owner has met the criteria in the consolidated advice note which was issued by the government in January 2020, an EWS1 form will not be needed.
A form will also not be needed for buildings taller than 18 metres with a valid building control certificate in accordance with building regulations.
Buildings which already have an EWS1 form will still be valid despite the updated guidance and this applies to a whole building or block for five years.
HCLGC asks government to unlock leaseholders caught in ‘Catch 22’ of EWS1 system
In a letter to housing secretary Robert Jenrick, Betts wrote: “We have been contacted by leaseholders who find themselves in a situation whereby they cannot sell or mortgage their homes, because mortgage lenders are insisting on a EWS1 form despite their properties not meeting criteria as set out in the new Royal Institution of Chartered Surveyors (RICS) guidance.”
In March, RICS issued guidance detailing the properties which would need a form to declare their cladding status, as it found banks were requesting the document for more properties than expected.
At the time, the body said the criteria would help “to unlock the market.”
Betts continued: “Some of these leaseholders are stuck in a Catch 22 situation because the freeholder, with whom the decision about whether to seek the form rests, is saying the form is not necessary.
“It will not be helping to unlock the flat market, which the revised guidance is intended to do.”
He asked the government to explain how it was supporting implementation of the new guidance. He also asked what action would be taken against lenders who insisted on forms for properties not included in the RICS criteria.
EWS1 form fail
Betts said: “As it stands the EWS1 system simply isn’t working. Industry guidance has set out which buildings don’t need the form, but it seems lenders are ignoring this and are opting not to provide finance without it.
“As ever, it is the leaseholder left facing the consequences, trapped in homes they cannot sell or remortgage.”
“We need to hear urgently about what the government plans to do about this,” he added.
Majority following guidance
An MHCLG spokesperson responding to the publication of the letter, saying: “Most major lenders, representing roughly 80 per cent of the mortgage market, have said that they will adopt the RICS guidance or take a markedly less risk-averse approach.
“The updated EWS1 guidance from RICS means nearly 500,000 leaseholders should no longer need a form to sell their homes – and we continue to encourage a sensible, proportionate approach to risk.
“The EWS1 is not a government form, legal requirement or a building safety certificate and we’re disappointed if it is still being asked for in some cases where it’s not necessary.”
If government pays for cladding, lenders will agree to mortgages – Star Letter 30/04/2021
This week’s comment was in response to the article: Cladding loan scheme should be abolished and paid for by industry and state, say MPs
Arron Bardoe said: “In what other world would the victim be expected to pay remediation?
“Where they are still trading, the developers should be fixing these problems or using their professional indemnity cover; and in turn they can sue the providers of the cladding if they remain in business.”
He added: “If the government does decide to alleviate owners of the costs, it may help lenders to agree their mortgages, as they currently factor in the cost of any future works when considering applications.”
Cladding loan scheme should be abolished and paid for by industry and state, say MPs
The cladding remediation report by the Housing, Communities and Local Government Committee (HCLGC) called for a Comprehensive Building Safety Fund to be set up, to cover the costs for all buildings, irrespective of height and tenure.
The HCLGC said: “The government should abolish the loan scheme. We reiterate our call on the government to re-establish the principle that leaseholders should not pay anything towards the cost of remediating historical building safety defects.”
It said the £5.1bn that had been made available to fix cladding so far was not enough and suggested the cost would be closer to £15m.
The HCLGC said a lack of details around the length of the debt for leaseholders living in buildings under 18 metres high was “concerning”.
Further, it was surprised that capping the loan at £50 a month was considered an affordable cost by the government.
HCLGC said it was “disappointing” there was no information about how the loan scheme would be operated and questioned who would be liable for the debt.
The committee suggested it was difficult to make a loan to a legal entity corresponding to a building but added: “lending to freeholders is also problematic, since freeholders cannot take out a separate loan if they have a charge on their interest in the building”.
Concerns were also raised over the lack of progress in making building insurance costs reasonable for leaseholders while their buildings underwent remediation.
The committee said: “The government has been engaging with the insurance industry for months, and all the while leaseholders are seeing their premiums skyrocket — yet another cost they are facing for a problem not of their making — or worse, living in uninsured buildings.
“The time has come for the government to consider setting a deadline for the insurance industry to act. If that deadline is not met, the government should intervene to require industry to resolve the problem of eye-watering building insurance premiums.”
Warnings were also made around the lack of financial support for leaseholders to address construction that would be required before cladding issues were fixed, and said that this could make tenants “hostage to the situation”.
It suggested that although developers such as Persimmon had dedicated money to pay for cladding construction, the firm’s pre-tax profits would enable it to provide more money.
However, it welcomed plans to introduce a developer levy and tax.
Wider impacts and delays
The report said there were only so many qualified professionals available to fix cladding issues, and warned the works could take between five and 15 years to complete.
It claimed there was a lack of data on full scale and extent of remediation needed for buildings both below and above 18m high, including how long it would take and whether the industry had the capacity to carry out works.
The government was asked to produce an assessment of the impact on the wider housing market as the committee said the EWS form did not do enough to address this.
Additionally, it requested the Prudential Regulation Authority to evaluate the effect of fire safety remediation on banking capital ratios.
The implication of the situation on leaseholder’s mental health was also raised in the report.
The committee said it did not think the government was doing all it could and recommended the state to work with local authorities to give affected residents access to physical and mental health support.
It was also suggested that the government publish monthly data on the number of buildings with non-ACM cladding and other serious fire safety defects awaiting remediation.
MPs vote against leaseholder cladding Bill protections
Speaking at the House of Commons this afternoon, housing minister Christopher Pincher said there was not enough time to redraft the bill to both stop leaseholders from footing the bill and address concerns with the existing amendment.
In a debate last month, he described the proposal as “unworkable and impractical,” claiming that building owners could use litigation to claim for costs which would delay construction.
Today, he said the amendment did not make it clear who would bear responsibility for costs, because there was no existing legislation to cross-reference.
Pincher (pictured) said: “The amendment would prevent the passing on of remediation costs, but it does not define what those costs are. That is a recipe for litigation and a recipe for delay.
“There is a lack of clarity on the definition of remedial work and what may be attributable to the provisions in this Bill, in other Acts or in none.”
Yesterday, the Ministry of Housing, Communities & Local Government (MHCLG) announced it had commissioned the British Standards Institution (BSI) to draft a code of practice for assessing external cladding.
MHCLG said this would give building owners clarity on the risk of materials used. The code is expected to be finalised later this year.
Pincher referenced the code: “I find it somewhat ironic that members are flagging these issues in the context of trying to impede the progress of the Bill, because having an up-to-date fire and risk assessment, which considers the external wall system of a building, should enable an insurer to take an informed and proportionate approach to risk, that considers not only the material and construction of the building, but the way in which it is managed.”