This paper considers the debate about who is responsible for paying for fire safety works on blocks of flats in the wake of the Grenfell Tower fire. It covers progress in implementing the Government decision to fund remediation work for affected blocks with ACM cladding in the social and private sectors. In March 2020, a £1 billion Building Safety Fund was announced to fund the removal of unsafe non-ACM cladding on high-rise blocks in the social and private sectors. Additional funding of £3.5 billion was announced on 10 February 2021. Ongoing issues include the adequacy of the funding available and how historic defects, such as a lack of fire stopping measures, will be paid for.
This information should not be relied upon as legal or professional advice. Read the disclaimer.
Why was EWS introduced?
After the Grenfell Tower fire focus was on the removal of aluminium composite material (ACM) from buildings over 18 metres. Focus then broadened to take in other types of combustible cladding. The Government’s Advice Note 14 (December 2018) contained guidance for building owners on 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”.
In 2019 lenders began to seek assurance on 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. In some cases, surveyors acting for lenders gave flats a value of £0, or significantly less than the asking price if the block did not have a certificate showing compliance with Advice Note 14. 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’s 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. The information gathered is used for valuation purposes. Lenders may refuse a mortgage application where one cannot be produced – this is a commercial decision.
The EWS process involves an assessment by a suitably qualified professional who completes the EWS1 form. Full information is on the RICS website.
Ongoing issues and action to address them
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 help long leaseholders (see below).
1. Which blocks need an EWS1 form?
RICS’ initial guidance said the process applied to residential buildings in scope above 18m in height. Not all high-rise blocks needed an EWS1 form “only those with some form of combustible cladding or combustible material on balconies.” RICS advised that some lower buildings might be in scope if there were specific concerns about combustible materials/balconies representing “a clear and obvious danger to life safety”.
The Government published consolidated guidance in January 2020 which says, “The need to assess and manage the risk of external fire spread applies to buildings of any height.” Flat owners in blocks lower than 18 metres reported lenders requiring EWS1 forms.
On 21 November an agreement between RICS, UK Finance, the Building Societies Association and Government was announced such that an EWS1 form is no longer needed for sales or re-mortgages on flats in blocks with no cladding. The Government said this would clear the way “for up to nearly 450,000 flat owners to sell, move or re-mortgage their homes.” Supplementary guidance on fire risk assessments was issued on 21 November.
…where a valuer or lender can establish that the building owner has met the advice in the consolidated advice note, an EWS1 form should not be required, nor would an EWS1 form be required for a building that is over 18 metres that has a valid building control certificate in place.
Some lower level blocks will still need an EWS1:
…in the light of the evidence received during the consultation, buildings of any height that have high pressure laminate (HPL) cladding and those of five stories or higher with combustible cladding linking balconies, will still need an EWS1 form.
RICS intended to work with the Government and stakeholders “to ensure the guidance is implemented by 5 April 2021.” UK lenders are being urged to support the guidance and “work with their valuation providers to implement.”
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. It’s expected that following the new guidance will free up inspectors to focus on higher risk buildings and speed up the process.
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, on 10 February 2021 the Government committed:
…to work towards a targeted, state-backed indemnity scheme for qualified professionals unable to obtain professional indemnity insurance for the completion of EWS1 forms.
In early April 2021 RICS said it had secured improved insurance terms providing greater fire safety cover for PII: “Under the new rules insurers are not permitted without specific dispensation to exclude fire safety claims on a property four storeys or less.” The new terms apply to firms renewing PII policies from 1 May 2021. Hugh Garnett, RICS Senior Policy Specialist, said:
We continue to work with Government and other industry stakeholders to find practicable and affordable solutions for the profession for properties over four storeys, with the Government’s commitment to developing an indemnity scheme for EWS1 completers.
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.
Calls for reform
In June 2020 the Housing, Communities and Local Government Select Committee (PDF 454 KB) 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.
- Library briefing paper: Leasehold high-rise flats: who pays for fire safety work?
- RICS EWS FAQS
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.
Help with long leaseholders housing questions including service charges and acquiring the freehold interest.