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Lenders update EWS-1 assessments and mortgage position

11 April 2022

IN LIGHT of the recent announcements made by the Government to ensure leaseholders are protected from remediation costs associated with fixing fire safety issues in blocks of flats over 11 metres in height, lenders and the Royal Institution of Chartered Surveyors (RICS) have now issued a statement to clarify the current lending position for such properties.

The lending and valuation industries agree that the owners and/or prospective buyers of flats should have confidence that the home in which they live – or wish to buy – is safe and free from fire safety defects.

Providing the mortgage application meets all of the lender’s other policy and regulatory requirements, the following lending position has now been confirmed:

*Where the EWS-1 Form or equivalent shows that remediation is not required (A1, A2 or B1 rating), lender will continue to lend

*Where the EWS-1 Form or equivalent assessment recommends remediation (A3 or B2 rating), lenders will take the necessary steps to facilitate lending where a costed and funded remediation plan is agreed with committed dates for starting and finishing all specified/required work

The RICS supports this position as it will enable valuers to provide a valuation within their existing obligations under RICS and international standards, which reflects the costed and funded remediation plan.

Further, the RICS expects that EWS-1 assessments are undertaken in accordance with the British Standards Institution’s PAS 9980.

Proportionate approach

Lenders and the RICS will continue to work with Government and key industry stakeholders to develop a proportionate approach towards addressing this situation for leaseholders. This will include a further review of lending and valuation policies in relation to lending on properties rated EWS A3 or B2 once the Building Safety Bill becomes law and enshrines the statutory protections for leaseholders and details the operation of the Remediation Order regime.

Lenders will work with the Government, the RICS, the Building Societies Association and UK Finance to establish a framework that will enable verification of these key requirements in order to ensure transparency for leaseholders and prospective purchasers alike.

The lenders supporting the new position are Barclays Bank, HSBC, the Lloyds Banking Group, Nationwide Building Society, NatWest and Santander.

UK Finance and the Building Societies Association are working on a second phase, expanding the agreement to include more lenders in the coming weeks.

The RICS, UK Finance and the Building Societies Association all endorse the latest statement.