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Why was EWS introduced?
After the Grenfell Tower fire in June 2017 there was a focus on removing aluminium composite material (ACM) from buildings over 18 metres. Over time, focus broadened to take in other types of combustible cladding. In December 2018 the Government issued Advice Note 14 containing guidance for building owners on the steps to take to tackle non-ACM materials on the external walls of high-rise buildings. Owners were advised to check “general fire precautions” and ensure that external wall systems were “safe”. This can require an intrusive inspection by a qualified individual to check the materials used and how they were installed.
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. Surveyors took the view that flats in blocks without a certificate showing compliance with Advice Note 14 had a value of £0 or significantly less than the asking price. An increasing number of mortgage applications were rejected; sales started to fall through.
In response, the Royal Institution of Chartered Surveyors (RICS) led a cross-industry working group to consider best practice in the reporting and valuation of tall buildings within the secured lending arena with a view to agreeing a new standardised process.
The EWS1 process was agreed by the industry in December 2019 – it is 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).”
What is the EWS process?
After its introduction, flat owners seeking to sell or re-mortgage their homes found that lenders asked for an EWS1 form. EWS1 forms are not a statutory requirement. Lenders may refuse a mortgage application where one cannot be produced – this is a commercial decision.
The EWS process involves a fire safety assessment by a suitably qualified professional who completes the EWS1 form. Full information is on the RICS website.
EWS1 forms are valid for five years. Where buildings are altered a new form may be needed.
Although the EWS process was devised as an industry solution to ‘unstick’ the market for flats in high-rise blocks, its implementation brought other problems to the fore. On 21 November the Government announced changes to the application of the EWS process to help long leaseholders (see below).
1. Which blocks does EWS apply to?
RICS’ guidance says the process applies to residential buildings in scope above 18m in height. Not all high-rise blocks need an EWS1 form “only those with some form of combustible cladding or combustible material on balconies.” RICS advises that some lower buildings may be in scope if there are specific concerns about combustible materials/balconies.
Flat-owners report lenders asking for EWS1 forms on lower blocks. This relates to consolidated Government guidance issued in January 2020: Advice for Building Owners of Multi-storey, Multi-occupied Residential Buildings which says “The need to assess and manage the risk of external fire spread applies to buildings of any height.”
On 21 November an agreement between RICS, UK Finance, the Building Societies Association and Government was announced such that an EWS1 form will no longer be needed for sales or re-mortgages on flats in blocks with no cladding. The Government said that this would clear the way “for up to nearly 450,000 flat owners to sell, move or re-mortgage their homes.”
It is acknowledged that a wider solution is required. The Government said it would continue to support homeowners who have cladding on their buildings “and where there is still more to do.” Supplementary guidance on fire risk assessments was issued on 21 November. RICS will work with stakeholders to develop new advice for surveyors to enable them “take a more proportionate approach and reduce the number of buildings where an EWS1 assessment is needed.”
2. Shortage of experts
There is a lack of qualified professionals to carry out assessments and complete EWS1 forms. The 21 November announcement included Government funding of almost £700,000 “to train more assessors, speeding up the valuation process for homeowners in cases where an EWS1 form is required.” The training will be delivered by RICS from January 2021 and is expected to train 2,000 additional assessors within six months.
The Government is also: “pressing lenders to accept other forms of evidence on building safety to support their valuations. The EWS1 process should only be used where there is clear need, and where no reasonable assurances or regulatory evidence exists to support valuations.”
3. Professional Indemnity (PI) insurance
In response to reports of the insurance industry being reluctant to offer PI insurance to professionals completing EWS1 forms, the Government said they are:
…exploring ways to address ongoing concerns around the availability of professional indemnity insurance and welcomes industry’s progress on developing a portal where lenders, valuers and leaseholders will be able to find out if their building already has an existing EWS1, thereby reducing the demand for duplicate forms.
4. What happens after the EWS1 is completed?
There are five possible results from an EWS assessment. Category A applies where buildings have external wall materials that are unlikely to be combustible. RICS states that A1 and A2 findings “are not likely to lead to any further action.” An A3 finding means that remedial work may be needed on attachments to the external wall, such as balconies. Category B applies where combustible materials are clearly present. A B1 rating means the engineer has decided that the fire risk is low, and no remedial work is required. A B2 finding means that there isn’t an adequate standard of fire safety and remedial work/interim measures are required.
An EWS survey by the Leasehold Knowledge Partnership in June-August 2020 found that 89% of 116 leaseholders had been told that their blocks required remediation work before sales could progress.
Calls for reform
In June 2020 the Housing, Communities and Local Government Select Committee called on the Government to “take full control” and put a fairer and faster process in place:
Reforms could include a relaxation of the rules on who is able to undertake these surveys, clarification of which buildings should fall within scope and more guidance to ensure the correct prioritisation of buildings. The Government should provide necessary funding to ensure that all affected buildings are surveyed within the next 12 months, so residents are not forced to wait years before they are able to sell their properties or obtain new mortgages.
The Government responded in September 2020. The developments announced on 21 November 2020 go some way towards addressing the Committee’s concerns about the EWS process. The Government has acknowledged that there is more work to do.
Library briefing paper: Leasehold high-rise flats: who pays for fire safety work?
The Commons Library does not intend the information in this article to address the specific circumstances of any particular individual. We have published it to support the work of MPs. You should not rely upon it as legal or professional advice, or as a substitute for it. We do not accept any liability whatsoever for any errors, omissions or misstatements contained herein. You should consult a suitably qualified professional if you require specific advice or information. Read our briefing for information about sources of legal advice and help.
Following the fire at Grenfell Tower, this paper sets out the events and commentary around the fire, the relevant building regulations, fire safety laws and housing standards, the Government response to the fire, the responsibilities around re-housing, and previous concerns raised with fire regulations.
This pack has been prepared ahead of the debate to be held in Westminster Hall at 9.30am on Tuesday 28 January 2020 on fire risk in flats and shared buildings. The debate will be opened by Matt Rodda MP.
Help with long leaseholders housing questions including service charges and acquiring the freehold interest.