In June 2017, lives were lost in the Grenfell Tower tragedy and the issue of unsafe building materials in blocks of flats, cladding, in particular, was highlighted. The problem was that the Grenfell Tower and many other new developments were covered with Aluminium Composite Material (ACM) cladding. Since the tragedy, this cladding has been found to be highly dangerous and combustible in nature. Other types of cladding, High-Pressure Laminate (HPL), and Metal Composite Materials (MCM) have also become a cause for concern.
After the tragedy, there was much debate between the government, contractors, builders, and insurance companies as to whether the use of ACM sheets in the cladding failed to meet building regulations and was installed illegally. The question of who was responsible for rectifying the issue has been asked many times since, as there are hundreds of social housing buildings, private section residential buildings, hotels, hospitals, and schools where this cladding has been used. It was also apparent that reform of building safety regulations was very much needed.
In response, the Government has taken a series of steps to strengthen building safety and regulations. The Government’s Ministry for Housing, Communities, and Local Government set up their Building Safety Programme which includes a large-scale project to identify both social sector and private buildings 18 metres high and above with unsafe cladding and carry out emergency restoration work. The Building Safety Bill was also announced in December 2019, alongside the intention to introduce a new Building Safety Regulator.
The introduction of the EWS1 form
In 2019 mortgage providers began to require assurances about the safety of external wall systems as a condition of approving mortgage applications. There was concern that flats in high-rise blocks wouldn’t represent good security and that owners could be liable for remediation costs. The result was an increase in the number of mortgage applications being rejected.
In response, the Royal Institution of Chartered Surveyors (RICS) led a cross-industry working group to consider best practices in the reporting and valuation of tall buildings within the secured lending arena with a view to agreeing on a new standardised process. This saw the introduction of the EWS1 process which was agreed upon by the industry in December 2019. The EWS1 form was described as an “industry-wide valuation process which will help people buy and sell homes and re-mortgage in buildings above 18 metres (six storeys).”
On 9 February 2021, a further £3.5bn was also pledged by Housing Minister to fix the unsafe cladding on high-rise buildings. As it stands, the government expects freeholders to pay to rectify cladding on buildings less than 18 metres high and a loan has been made available to allow these freeholders to borrow money to pay for these repairs at a low rate of interest. Any costs passed on to leaseholders are due to be capped to a maximum of £50 a month/£600 year. A new developer levy and tax on profits for housebuilders have also been proposed to recoup the costs arising from the cladding issue, but this is yet to be finalised and will not come into force until 2022.
The above has resulted in thousands of owners of medium to low-rise properties less than 18 metres high being left in limbo, as they are not able to sell their homes. This is because they are awaiting confirmation that their properties meet fire safety regulations and mortgage lenders and insurers will provide loans and home insurance cover. The delay in obtaining the EWS1 forms for applicable properties is mainly down to there not being enough inspectors available to check properties and issue the form and this, in turn, is also delaying property sales.
If an individual is buying a property in good faith then why should they pay to repair it? This wouldn’t happen with the purchase of a new build property or a car.
A recent webinar, held by Countrywide Survey Services, brought together representatives from RICS, Barclays, and Nationwide Building Society to discuss their views on the matter. The overarching feeling from this discussion was that ‘buyers need transparency on the buildings that have problems so that they know what they are buying and also the lenders need to know if they can lend a mortgage on these properties.’
Many leaseholders and Help to Buy scheme participants have been presented with extortionate repair bills already to rectify an issue that they were completely unaware of when purchasing their property.
Many industry insiders, property owners, and leaseholders are asking the government to do more to assist all property owners and tenants whose homes are affected by unsafe cladding, not just those whose developments are 18 metres high or more. We need a safe set of housing with the right documentation provided so that people know the risk before rather than after purchasing their property.
We wish people could go to sleep tomorrow evening, knowing their property is safe.Robert Stevens, Nationwide Building Society.
We believe that lenders and consumers need the confidence that houses and flats have been built properly. The safety of building and human beings shouldn’t be areas where corners are cut.
If you have any questions regarding the cladding crisis and would like to discuss with us, please get in touch.