Recently, the housing, communities and local government committee (HCLGC) found that ‘fixing fire safety defects’ in high risk residential buildings could cost up to £15bn, and branded the mortgage industry’s cladding form ‘slow and expensive’. The EWS1 process helps banks ‘make lending decisions on high rise properties with a potential fire risk’.
It asked for the government to step in, as not only was the process ‘not working’ but it should ‘take control’ by putting a ‘faster and fairer’ system in place, as the ‘industry-designed’ process was ‘slow and expensive’ and ‘applied to an unnecessarily wide range of buildings’. It also believed ministers should have ‘issued clearer guidance’ to mortgage lenders before advising on fire risk buildings.
The form, introduced last December, came from collaborations between UK Finance, the Building Societies Association (BSA) and the Royal Institution of Chartered Surveyors (RICS), 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 building 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 within a month brokers began reporting lenders were 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 – made to management and maintenance companies of high rises affected – being delayed. At the time, this related to ‘those qualified to issue the EWS1 certificate, the number of buildings that need to be inspected and the time needed to complete this review’.
HCLGC said there was a ‘lack of qualified, insured chartered fire engineers to undertake the required surveys’, so a ‘large number of buildings would not be inspected for many years’. The EWS1 surveys have also been expensive, with costs ‘typically passed to residents through their service charges even where no fire safety defects were found’.
As a result of fire safety advice from the Ministry of Housing, Communities and Local Government (MHCLG), ‘a much larger number of buildings’ fell into scope ‘than had been envisaged’, and ‘the process has 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’, whilst also noting that ‘at least’ 860 EWS forms ‘have already been completed’, meaning homeowners in at least 800 blocks ‘have been able to buy, sell and remortgage or plan remediation works. EWS1 was created to find a solution to the problems caused in 18m+ tower blocks by MHCLG advice’.
MHCLG’s consolidated advice note in January 2020 ‘caused further significant confusion when it brought all buildings regardless of height into scope and added to the already known capacity issues with fire experts. RICS continues to call on government to take ownership and properly fund remediation works to all affected buildings. Only with a well thought out, government funded strategy, will leaseholders be able to live in safe buildings’.
More recently, Minister for Fire and Building Safety Lord Greenhalgh held talks with RICS to ‘attempt to resolve confusion’, and 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 EWS1 form for possibly ‘several years’.
Mr Pincher later admitted that there are ‘fewer than 300’ qualified chartered fire engineers to undertake the surveys. Residents have complained publicly including Wisteria Apartments in London, tenants of One Housing properties in London and Slough, residents of Zenith Close in London, and a landlord in Twickenham.
Late last month, a Which? investigation revealed that leaseholders are ‘being duped into paying thousands’ to fraudsters using fake EWS1 forms, with the government notified, and Original FM has now reported on Mrs Cooper, who thought she had ‘created credibility for my future’ by buying a property, but has instead become ‘stuck’ and ‘robbed of the ability to plan a future’ by the EWS1 form situation in her particular flat block.
Despite the block being below 18m in height, the government’s changing guidance on building safety to remove combustible cladding ‘on all buildings, regardless of height’, has meant that ‘despite receiving several offers’ for her home, without an EWS1 form ‘my property has no value in the eyes of mortgage lenders’.
She added that a ‘common rebuttal by freeholders’, that there ‘aren’t enough qualified engineers to conduct’ the surveys, led her and her neighbours to be ‘proactive’ and find engineers ‘willing to produce’ the report ‘in a matter of weeks’, but the building’s freeholder Peabody ‘will not allow us to instruct them nor are they willing to pay for their own engineer’, because assessing the property could ‘mean further investigation (intrusive) or remediation’.
In turn, ‘there is no benefit to them paying for a report which may indicate work is needed because it creates a potentially large liability for them’, with Peabody having ‘been very clear that unless there is legislation that instructs them to do so, they won’t help us’. Mrs Cooper added that ‘if Grenfell taught us something, it should be that housing associations should not so blatantly put a value on human life’.
Planning ‘how we would escape from the top floor’ in a fire ‘is not a conversation I thought my husband and I would have to have in such detail’, and in her view ‘government policy on building safety is ambiguous, confusing and at odds with stimulating the housing market’, having ‘done nothing but create a circle of blame, with developers, insurers, freeholders, and lenders all dodging responsibility.
‘Meanwhile, thousands are stuck in potentially unsafe buildings with no prospect of moving on. When will the government step in to break this cycle?’. Peabody responded: ‘This is an extremely frustrating situation for leaseholders who are in this difficult position through no fault of their own and we are sorry for the anxiety this is causing. We’re doing everything we can to support them but sadly there is no quick solution.
‘It’s an issue affecting hundreds of thousands of people up and down the country and is being driven by mortgage lenders and valuers wanting evidence that is complex and difficult to obtain. The safety of our residents is our absolute priority and we have a major building safety programme under way to ensure our homes meet the latest regulation issued in January. We have more than 2,000 buildings over 11 metres high and are working our way through these in order of risk.
‘We are working as quickly as we can, but the reality is that it will take us some time to complete. This is due to the scale, the length of time each investigation takes and a shortage of qualified professionals to complete the work. We are supporting leaseholders by making representations to valuers or lenders where possible and discussing whether leaseholders can temporarily sub-let their property on a case by case basis.
‘But to really resolve the issue it needs government action to facilitate lending, reform the certification process and to help finance and expedite the necessary surveys and works.’