The External Wall System: a necessary intervention but with damaging effects to the property market

The Grenfell tragedy highlighted decades of inadequate regulation and a culture of building quickly and cheaply. In the wake of this, the Government revised its rules on which materials developers could use for the construction of buildings over 18 metres high. The changes, however, were of such that it meant buyers, valuers and lenders could not definitively confirm if buildings were safe.

In December 2019, the External Wall System (EWS) process, and resulting form (EWS1) were launched by the banking trade bodies UK Finance and the Building Societies Association (BSA) and The Royal Institute of Chartered Surveyors (RICS) to give clarity to lenders and comfort for buyers.  The EWS1 must be carried out by a fully qualified member of the relevant construction body who will assess whether a property contains materials that are potentially dangerous with the resulting form being valid for a period of 5 years (unless substantial works are done to a property affecting the original conclusion of the form where a new EWS1 may be required). At the beginning of 2020, however, government advice was tightened extending to any building which has some form of combustible cladding or balconies with combustible materials which may require remedial works.

Since this further advice was announced, many lenders’ default position is to routinely demand an EWS1 on almost any apartment block giving rise to thousands of mortgages being refused and even more properties being rendered unsellable and, potentially, unsafe.   The Times newspaper recently reported that up to 6% of all homes in England could be unmortgageable for years to come as a result of the conclusion of their EWS1 or the lack thereof.

The problem is exacerbated by the fact that obtaining the EWS1 is incredibly difficult because of the limited numbers of professionals who are able to carry them out in the first place.  Furthermore, some residents in England have been told it could be years before the necessary changes to their building are made. Essentially, it is the freeholder’s responsibility to ensure that a building is safe but that does not mean that they will assume liability to pay for the EWS1. In fact, leaseholders are now identifying clauses within their leases which shifts the responsibility to themselves to pay for the survey and also to foot the bill for remediation costs which has been seen to run into six figure sums.  This is, understandably, proving to be time-consuming and cost prohibitive with service charge and insurance soaring; leaseholders are faced with living in a property that carries a greater fire risk and remediation work which must be carried out before their home could be sold.

It is worth remembering that there are good intentions behind the EWS1 but in practice, there are evidently serious issues which need to be resolved. The HCLG (Housing, Communities and Local Government) Select Committee has suggested that the EWS1 process is reformed by: (a) relaxing the rules on who can undertake the assessments; (b) being more specific on which buildings need to be tested; and (c) giving guidance as to which blocks should be prioritised.  Perhaps the imminent arrival of the Building Safety Bill will offer some tangible help to affected homeowners; they can only hope.

We will continue to monitor the situation but in the meantime if you do have any queries about this topic, please contact Joanne McIvor, or any member of the Property team.

 

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