Richard Snape, a leading authority and presenter on both commercial and residential conveyancing matters, provides an update on the EWS1 Certificate and its application.
Following the Grenfell disaster in June 2017, mortgage companies naturally became reluctant to lend on flats in blocks which might have combustible cladding. On occasion, valuers were valuing such flats at £0. There was, moreover, no standardisation between the lenders.
The industry’s response was the EWS1 (external wall survey) Certificate which was introduced in December 2019 after discussion between UK Finance and the Royal Institution of Chartered Surveyors. A recognised property professional with the requisite qualification would carry out an inspection where deemed appropriate and would produce an EWS1 Certificate which would be required by the mortgage company. The certificate would last for five years and would only be required for multi-let residential properties of more than 18 metres (c. six stories) in height. If the cladding was deemed safe then the mortgage company would proceed, it would require the cladding to be replaced, a process which can take a significant amount of time.
Unfortunately, in January 2020, the Department of Housing Communities and Local Government muddied the waters somewhat when it produced Advice for Building Owners of Multi-Storey, Multi-Occupied Residential Buildings. This suggested that the EWS1 may be appropriate in some multi-let premises of less than 18 metres in height and which do not have external cladding, the concern apparently being high pressure laminate which is causing some concern. This concern increased after it was found to contribute to a fire in a block of halls of residence in Bolton in November 2019. As a consequence of this, some mortgage companies have required the EWS1 on buildings with three stories and where brick is the building material. This is surely not what was intended.
The real problem is that there appear to be only 300 qualified fire safety inspectors in the country and insurers are not prepared to allow other property professionals to carry out the assessments due to the potential level of liability where there is a claim. Estimates vary but at the higher end there may be up to 3 million flats which may be affected. The certificates can cost upwards of £10,000 and there are examples of landlords or agents (who commission the assessments) being quoted of up to the 10 years for one to become available.
On 27 November 2018 in England (January 2020 in Wales), cladding was finally banned in multi-let residential properties of more than 18 metres in height. If the building was completed under the 2018 Building Regulations the mortgage company should not require the certificate.
The EWS1 is undergoing review and this cannot come too soon for many, especially at the current time when many are unable to relocate to the countryside from their small city-centre dwellings. If changes are not made soon, some estimate that the level of negative equity in such premises will be greater than during the credit crunch of 2008-2011.
Richard Snape October 2020
DISCLAIMER: Nothing said in this article constitutes legal or other professional advice and no warranty is given nor liability accepted for the contents of this article. Richard Snape, Davitt Jones Bould and LawSure Insurance will not accept responsibility for any loss suffered in consequence of reliance on information contained in the article.