Government intervenes to support leaseholders over EWS-1 Forms issue
27 July 2021
LEASEHOLDERS IN blocks of flats with cladding should be supported to buy, sell or re-mortgage their homes after the Government agreed with major lenders to pave the way towards ending the need for EWS-1 Forms. The announcement was made in Parliament by Housing Secretary Robert Jenrick.
The news follows in the wake of expert advice that EWS-1 Forms should no longer be necessary for buildings below 18 metres in height. Earlier in the year, investigations took place around the risk landscape for medium and lower-rise buildings. Subsequent advice from those experts* involved makes it clear that there’s no systemic risk of fire in blocks of flats in this category.
The report recommends that residents are reassured as to safety and that a more proportionate approach should be urgently instituted, in turn requiring action to be taken by all market participants.
Several major High Street lenders have committed to review their practices following the new advice. HSBC UK, Barclays, the Lloyds Banking Group and others have all said that, combined with the Government’s statement, the expert report paves the way for EWS-1 Forms to no longer be required for buildings below 18 metres and will help in further unlocking the housing market.
A statement issued by HSBC reads: “We welcome the statement from experts on building safety and note the assessment from the parties to the statement that there is no systemic risk from fire in medium and lower-rise blocks of flats. Our expectation is that the existing Consolidated Advice Note will be removed and, with the endorsement from the Institution of Fire Engineers, this means that we will no longer require EWS-1 Forms for buildings below 18 metres. Consequently, Royal Institution of Chartered Surveyors (RICS) guidance will be updated in line with this advice. We look forward to these changes being reflected in valuations from our RICS qualified partners and remain committed to supporting affected homeowners.”
Barclays states: “We have seen and support the statement from experts on building safety and accept their assessment that there is no systemic risk from fire in medium and lower-rise blocks of flats. This should remove the need for EWS-1 Forms for mortgage applications in any block below 18 metres. Our approach to mortgage lending and valuation has been and will remain proportionate, relying on the normal statutory process for blocks of flats having an up-to-date fire risk assessment to assure residents’ safety.”
For its part, the Lloyds Banking Group notes: “We welcome the Government’s statement on fire safety in multi-storey apartment blocks and specifically its declaration, based on advice from relevant experts on building safety, that there is no systemic risk from fire in medium and lower-rise blocks of flats. In particular, we welcome the Government’s pledge to withdraw its Consolidated Advice Note. We look forward to working with the RICS as it updates its specialist guidance, which should provide the certainty everyone needs. We also look forward to seeing the details of the Government’s loan scheme that will provide residents with support if they need any cladding-related remediation work to be done. We expect the Government’s action will help further unlock the housing market.”
The Government welcomes the support of these lenders, but is now calling on others to demonstrate leadership by working rapidly to update guidance and policies in line with the expert advice that has been delivered.
That expert advice was commissioned by the Secretary of State after witnessing what Dame Judith Hackitt, chair of the Independent Review of Building Regulations and Fire Safety, had described as “extreme risk-aversion” which has left leaseholders across the country receiving costly bills for remediation that’s not necessary. The advice states that fire risks should be managed wherever possible through measures such as alarm systems or sprinklers, and also that the overwhelming majority of medium and low-rise buildings (ie those under 18 metres) with cladding should not require expensive remediation.
The intervention is designed to reduce needless and costly remediation in lower-rise buildings and is part of wider efforts orchestrated to restore balance to the market, in turn helping flat owners to buy, sell or re-mortgage their homes.
Risk to life in blocks of flats remains very low. The number of fires in homes in England has been on a general downward trend for many years now, reaching an all-time low last year. 91% of fires occurred in houses, bungalows, converted or low-rise flats, while only 9% were in blocks of flats of four storeys or more.
The Government is already funding the whole cost of replacing unsafe cladding on all buildings over 18 metres through its unprecedented £5 billion Building Safety Fund, and at the same time has been clear with building owners, lenders and the industry throughout that they must take a proportionate response to fire safety and enable homeowners to carry on with their lives.
The Government’s latest announcement – delivered by the Secretary of State during the second reading of the Building Safety Bill in Parliament – demonstrates that the industry should now be actively adopting an evidence-based approach towards fire safety. The move has been backed by the Institution of Fire Engineers and the National Fire Chiefs Council.
Housing Secretary Robert Jenrick said: “This announcement is a significant step forward for leaseholders in medium and lower-rise buildings who have faced difficulty in selling, anxiety at the potential cost of remediation and concern around the safety of their homes. While we are strengthening the overall regulatory system, leaseholders cannot remain stuck in homes they cannot sell because of excessive industry caution, and nor should they feel that they’re living in homes that are unsafe when the evidence demonstrates otherwise.”
Jenrick continued: “That’s why I commissioned an expert group to further examine the issue and have already agreed with many major lenders that lower-rise buildings will no longer need an EWS-1 Form. The presumption should be that these homes can be bought and sold as normal.”
In conclusion, Jenrick observed: “We hope that this intervention will help to restore balance to the market and provide reassurance for existing and aspiring homeowners alike. The Government has made its position very clear. I would urge the rest of the market to show leadership and endorse this proportionate and evidence-based approach towards safety.”
There’s a long-standing legal duty on the ‘Responsible Person’ for all purpose-built blocks of flats to have an up-to-date fire risk assessment. Moving forward, where the ‘Responsible Person’ has identified fire safety issues, they should update their fire risk assessments to determine any actions required. This could include measures such as installing sprinklers or alarms and, in exceptional cases, remediation work to ensure buildings are safe and people feel safe.
To help with this, new guidance for the risk assessment of external wall systems will be introduced. PAS 9980 will ensure that fire risk assessments are consistent and proportionate to risk and also that actions to manage risk are cost-effective. As stated, the Consolidated Advice Note will be withdrawn.
For buildings under 18 metres which do require remediation, the Government will introduce a financing scheme such that no leaseholder will have to pay more than £50 per month for the cost of replacing unsafe cladding. Further details of this scheme will be set out in due course.
Comment from the industry
Welcoming the support that has been forthcoming from the fire safety profession and also from the major lenders mentioned, Dame Judith Hackitt said: “I’m pleased to see the support and commitment to return to an evidence-based and proportionate approach to fire and building safety. It’s critical, given the significant – and, in many cases, unnecessary – impact this is having on people who live in and own homes located in blocks of flats. What’s needed now is for the remaining bodies and lenders to climb onboard so that we have a collective, fact-based system that’s reflective of the reality of the situation and reassures leaseholders that they, their homes and their investments are safe.”
Steve Hamm, CEO of the Institution of Fire Engineers, stated: “The Institution of Fire Engineers supports the expert statement that has been issued. We expect that this will lead to a significant reduction in the demand for the EWS-1 Form process from mortgage valuers, and particularly so when it comes to those buildings under 18 metres in height.”
Hamm went on to comment: “The statement will support competent fire engineers to use their professional training, judgement and expertise to assess buildings based on a professional appraisal of risk. This should enable a move away from the often risk-averse and overly cautious approach that has been seen in many cases.”
Further, he observed: “We welcome the commitment of all parties to ensure a proportionate and evidence-based approach towards fire and building safety for all buildings along with the increased scrutiny to be provided by the new regulators and the Gateway-focused approval process, which we expect will lead to improved levels of safety, providing comfort and reassurance for residents and homeowners as well as the wider market.”
Plans for developers
The Government has also set out plans for developers of high-rises in England to contribute to the cost of remediating safety defects in what is a major step towards ensuring industry contributes to righting the wrongs of days gone by.
A published consultation outlines that the levy will be applied when developers seek permission to build certain high-rise residential buildings of 18 metres or more in height.
The money recouped would contribute towards fixing historic fire safety defects, including unsafe cladding, thereby protecting leaseholders and taxpayers from shouldering the burden of remediation costs.
The Government is calling for views on the proposed design of the levy, which was first announced earlier this year as part of a multibillion-pound package to fix unsafe cladding on high-rise residential buildings, alongside wider financial and regulatory support.
The Government has also confirmed that the Building Safety Fund will reopen for applications in the Autumn for any eligible buildings that missed the original deadline in June. More details are to be published in the coming months.
*The expert group members are Dame Judith Hackitt (chair of the Independent Review of Building Regulations and Fire Safety), Sir Ken Knight (chair of the Independent Expert Advisory Panel on Building Safety following the Grenfell Tower fire), Ron Dobson (former London Fire Commissioner) and Roy Wilsher (advisor on fire reform and former chair of the National Fire Chiefs Council)