THE DIRECTOR of delivery at the Conveyancing Association (CA) revealed that the results of external wall system (EWS1) tests can be hidden if administrators want them to be.
Mortgage Solutions reported on the views of Beth Rudolf, the CA’s director delivery, who noted that ‘getting to a point where every single building which has potentially dangerous cladding on it’ or ‘any other potentially flammable external wall system’ is ‘made safe’ has ‘been much more difficult than perhaps any of us would have thought or liked’, with ‘complications’ around responsibility for cladding and funding its removal ‘numerous across a large number of buildings’.
She had ‘nothing but sympathy for those leaseholders who feel completely powerless and in limbo’, and that ‘the stress this is causing is obvious, not just in terms of the money required to sort out high-risk buildings but also in terms of the requirements’ for an EWS1 form. Ms Rudolf pointed to the ‘critical hurdles’ around the forms, including who can provide them, lender acceptance, and ‘what this means for mortgage availability, pricing, not to mention service charge rates’.
On this, she pointed out that the association was ‘acutely aware’ of frustrations felt by advisers and clients in terms of securing forms, as well as ‘getting the freeholder to agree to’ a survey ‘being carried out’, alongside lender requirements ‘to have this upfront before any lending decision can be made’. The CA had ‘secured some common sense amendments’ to the rules, including those living in buildings without external wall systems not now requiring an EWS1 to sell or remortgage.
With the ‘organisational and resource issues’ around securing EWS1 forms ‘for those who have flats with cladding’, it ‘made no sense to require one for those that don’t and was simply another obstacle in the way’ for those trying to sell or remortgage, but – highlighting the claim that 450,000 homeowners will not be impacted – Ms Rudolf added that ‘we also know there are hundreds of thousands of others who will not be as fortunate’, and are ‘severely compromised’.
With only 300 trained fire engineers qualified to issue EWS1 forms, she added that ‘even more shockingly’ lease administrators ‘can ask them not to publish the EWS1 if it realises that the system requires work’, such as not being fire safe. The CA has ‘tried’ to provide member firms with practical guidance on cladding to ‘help steer them and their clients through’ the process, but this ‘is not a simple task’, with different lenders having different rules ‘about what is acceptable to them’.
There is ‘clearly a role for advisors in helping hold the client’s hand if they are in this unenviable position’, with CA guidance issued to all members firms. However, with the Building Safety Bill and the building safety regulator coming, ‘there will undoubtedly be changes to the rules that will need to be reflected in updated guidance’.
She advised all stakeholders in EWS1 cases to ‘take extra care’, as with changes a ‘degree of misinformation’ can arise, ‘which often results in extreme stress and frustration being heaped upon’ clients ‘already feeling damaged by their situation’. The CA advised that before listing properties, prospective sellers ‘ask their lease administrator whether there is an external wall system and if so ask to see the EWS1 form’.
Should there not be, ‘ask them to get one done’, while buyers will want to ask if the EWS1 has been prepared ‘and to see it to understand whether remedial works are required’, alongside the potential cost to them should they buy the property. She concluded by stating that ‘by working together we can help, but we’ll need to set out realistic goals about what might be achievable in the current environment, otherwise we may all end up disappointed’.
Last month, the government announced it would help homeowners by ensuring that owners of flats in buildings without cladding ‘will no longer need an EWS1 form to sell or remortgage’, as part of an agreement the government claimed it had reached with RICS, UK Finance and the Building Societies Association (BSA).
However, UK Finance and the BSA ‘did not consent’ to being part of the announcement, which said EWS1 forms ‘are not and have never been required’ for buildings without cladding. A finance industry source also said the proposal ‘did not mean properties with issues other than cladding would automatically be exempt’ from an EWS1 survey.
Buildings with wooden balconies and other issues ‘should have been included among those which still required’ external fire safety checks, and it would depend on the decision of a ‘suitably qualified, independent and properly insured surveyor’. The UK Cladding Action Group also pointed out that only a ‘small subset’ of buildings would benefit.
The UK mortgage industry added that this ‘does not solve the problem’ and that it ‘it changed nothing’ for buyers or sellers. In October, Prime Minister Boris Johnson revealed that a reassessment of the form was being undertaken by RICS, after the housing, communities and local government committee (HCLGC) had, earlier this year, branded the form ‘slow and expensive’.
The form, introduced last December, aimed to ‘create a standardised process that would make it easier for brokers and homeowners to find suitable mortgages’. A valuer could request it from a building owner or representative, and require a professional ‘confirm that the actual material on the walls posed a limited risk or was non-combustible’.
Should it contain materials that ‘posed a significant fire risk’, a ‘detailed description of what was needed to fix it had to be issued’, but lenders began rejecting mortgage applications. This was because of ‘outstanding cladding inspections trapping borrowers with their current providers’, and so applications were being cancelled due to inspection requests being delayed.
As a result of government advice ‘a much larger number of buildings’ fell into scope ‘than had been envisaged’, and the process ‘lacked sufficient input from leaseholder representatives, but also other important stakeholders, including the insurance industry’. RICS urged the government ‘to take greater ownership of the situation’, and Minister for Fire and Building Safety Lord Greenhalgh held talks with RICS to ‘attempt to resolve confusion’.
Then, Housing Minister Christopher Pincher stated mortgage lenders are reviewing how the forms are used, though some residents have been told by housing associations that they ‘cannot produce’ the form for possibly ‘several years’. He later admitted that there are ‘fewer than 300’ qualified chartered fire engineers to undertake the surveys.
In late August, Which? revealed leaseholders are ‘being duped into paying thousands’ to fraudsters using fake forms, and the crisis saw mortgage brokers report ‘delays and scuppered plans’ for clients. The Fire Industry Association launched a portal that will ‘provide a central readily-accessible location for EWS1 forms’ and allow fire engineers to complete forms online.
After this, the Financial Conduct Authority (FCA) reported that the government and banks are working on a more ‘risk-based’ approach to assessing properties with cladding. More recently, Mr Pincher ‘refused to acknowledge’ any role in the issues stemming from government guidance, stating that the Advice for Building Owners of Multi-storey, Multi-occupied Residential Buildings guidance – released in January – ‘was written for building owners to ensure the safety of their buildings. It was not designed to be used for valuation purposes’.
In late November, Mr Johnson ‘slammed’ mortgage lenders for use of the form, but ‘failed to promise that leaseholders would not have to pay for cladding removal’.