THE ROYAL Institution of Chartered Surveyors (RICS) said that the government’s plan to provide indemnity insurance for professionals for fire safety assessments ‘will ease current bottlenecks’.
As part of the announcement on Wednesday in which the government revealed a five point strategy that aims to ‘provide reassurance to homeowners and confidence to the housing market’, it also said it was working with industry to ‘reduce the need’ for external wall review (EWS1) forms, thus ‘preventing leaseholders from facing delays’ and allowing for purchases and sales.
The government said it was ‘aware’ that securing ‘appropriate’ professional indemnity insurance for the work was a ‘major barrier’, and so it said it was ‘committing’ to work towards a ‘targeted, state-backed’ indemnity scheme for professionals unable to obtain said insurance for the EWS1 surveys. It would ‘work closely’ with industry to design such a scheme, with more details to come.
Building has now reported on RICS’ view on the indemnity scheme, with the institution stating that it ‘promised to work urgently’ to ensure such a scheme is ‘rolled out as quickly as possible’ to increase the number of checks being made. The scheme would focus on qualified professionals who cannot obtain such insurance cover for EWS1 surveys, and RICS’ global building standards director Gary Strong said the scheme would increase the number of professionals able to complete the forms.
He also noted that this would help ‘relieve the bottlenecks that currently exist’, adding: ‘It will mean that the chartered surveying professionals we are upskilling to complete EWS1 forms, creating additional capacity in the market through the EWS assessment training programme, have surety that they will be able to gain PII. This will be welcome news to leaseholders and homebuyers. We will continue to work with all parties to ensure the commitment is delivered on, urgently.’
Earlier this month, RICS revealed that the training course it had developed to help train more people to undertake EWS1 surveys had seen 1,2000 registrations, with the form, introduced in December 2019, having 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 last year, 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’, and in December the director of delivery at the Conveyancing Association (CA) revealed that the results of EWS1 surveys can be hidden if administrators want them to be.
Also in November, 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, Mr Johnson had revealed that a reassessment of the form was being undertaken by RICS, after the housing, communities and local government committee (HCLGC) had, last year, branded the form ‘slow and expensive’.
In January, a report from consultants Capital Economics found that around 1.27m flats in England ‘could be unmortgageable’ due to combustible cladding concerns. The consultants added that ‘if it was to be assumed’ that the government’s November statement in relation to EWS1 not applying to certain buildings ‘made no difference to the behaviour of lenders’, complications ‘could affect’ all buildings taller than 11m or three storeys.
Most recently, RICS launched a consultation on new guidance that aimed to ‘clarify’ buildings that are required to undertake an EWS1 survey, and to ‘significantly’ reduce the number of properties requiring one. The guidance ‘looks to clarify’ building types that surveyors and mortgage lenders ‘should demand’ an EWS1 form for before the sale or purchase of apartments.
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