You are viewing 1 of your 1 free articles
Banks will not change EWS1 policies until official guidance is revoked
Leaseholders will still have to wait for banks to stop requesting fire safety forms on buildings under 18 metres tall, with lenders stating that they will not change their policies until current government guidance is revoked.
Inside Housing has received responses from eight of the country’s largest mortgage providers to housing secretary Robert Jenrick’s assertion last week that they should no longer request external wall system 1 (EWS1) forms on buildings below 18 metres tall.
The majority of these banks said that they would not change their policies immediately and that they would only alter their approach when official advice from the government and the Royal Institution of Chartered Surveyors (RICS) is removed and replaced.
However, RICS has said that that any change to its official advice would require a consultative process to assess whether a change would be in the public interest.
RICS introduced EWS1 forms in December 2019 to provide a framework for surveyors to assess the compliance of a building’s facade. They are used by most banks to assess whether remediation work is needed before providing a mortgage.
Last week, Mr Jenrick announced that banks should no longer request EWS1 forms on buildings below 18 metres. The change in tack from the government came after advice from its experts suggested that there was no widespread or systemic risk of fires in blocks below 18 metres, and this should be reflected in lenders’ EWS1 policies.
READ MORE
When asked whether Mr Jenrick’s announcement had led to a change in their policies, many of the banks said that while they welcomed the announcement, it would not impact policies in the short term, and that they would continue to take advice from surveyors on whether forms were required on buildings below 18 metres.
The majority said that they would wait for the government to remove its current consolidated advice note (CAN) for checking the safety of buildings and for RICS to update its current EWS1 guidance, before any changes could be made (see responses below).
In a joint statement UK Finance – the body that represents banks – and the Building Societies Association (BSA) said that once the government and RICS made these changes to reflect the views of expert witnesses, lenders would be in a “clearer position” and would be able to update their lending processes.
The CAN was published in January last year and is responsible for dragging thousands of low and medium-rise buildings into the external wall system crisis. The guidance called for building owners to check cladding systems on all buildings regardless of height, moving from a previous focus on buildings taller than 18 metres.
During his announcement last week, Mr Jenrick said that the government would be looking to withdraw the CAN but gave no timeline. The Ministry of Housing, Communities and Local Government said this will be removed “shortly”.
UK Finance and the BSA added that until the changes are made, lenders would continue to be guided by surveyors’ expert opinions of when an EWS1 form is required for low and medium-rise blocks of flats.
However, RICS has said that there is currently nothing in its guidance that stops banks from changing their policies to match the government’s stance immediately.
It said that it is now “talking urgently” with lenders, valuers, insurers and fire safety assessors to review the impact of the government’s statement on its guidance and the effect the government risk-proportionate guidelines would have on fire risk assessors, adding that it is “working as quick as it can”.
Nevertheless, the organisation stressed that before guidance was updated it would need to go through a consultative process and any changes would need to be decided on by an independently led standards and regulation board to ensure they were in the public interest.
If RICS changes its guidance, it will be the second time this year after new guidance aimed at taking hundreds of buildings out of the scope of EWS1 checks was published in March. The consultation period for this change took just over two months.
And if the government’s new advice is implemented, thousands of buildings under 18 metres that have yet to receive an EWS1 check could be exempt. According to government statistics, there are around 88,000 buildings above 11 metres tall, containing more than 1.2 million leasehold homes.
However, RICS has confirmed that a change in guidance would have no impact on those buildings that have already had an EWS1 check, with banks likely to take into account any information from these checks before providing mortgages.
An MHCLG spokesperson said: “We’re pleased that many major lenders are welcoming this move – and we continue to work closely with them and the Royal Institution of Chartered Surveyors to correct the present market failure and support leaseholders to sell their properties, should they wish to do so.
“The view from the independent experts is that there is no evidence of a systemic risk of fire in blocks of flats, but excessive industry caution is leaving many leaseholders in lower-risk buildings unable to sell, or facing bills for work which is often not necessary.
“This must stop and, in line with the expert advice, we’ve set out that EWS1 forms should not be requested for buildings below 18 metres and we urge the market to follow this approach.”
Banks’ full responses
Joint statement from UK Finance and BSA: “Flats should be safe places to live so we welcome the government’s expert panel view that there is no systemic risk from fire in medium and lower-rise blocks of flats.
“The government has outlined a series of actions it will be taking over the next few months, including the withdrawal of the current consolidated advice note on cladding and we urge them to continue to work with relevant stakeholders to ensure all documents, including the RICS guidance, are amended to reflect the views of the expert panel.
“Once these changes are made and the BSI has introduced its new standard, both borrowers and lenders should be in a clearer position and know what is expected of them, and firms will be able to update their lending processes. Meanwhile, lenders will continue to be guided by surveyors’ expert opinions when a EWS1 form is required for medium and low-rise blocks of flats.”
HSBC: “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 IFE, this means we will no longer require EWS1 forms for buildings below 18 metres, and consequently 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.”
Nationwide: “Nationwide currently operates a risk-based approach when it comes to requests for EWS1 forms on buildings under 18 metres.
“This means the surveyor will only make the request if they have significant fire safety concerns, which has minimised the number of requests for EWS1 forms, only asking for them in a small number of cases to protect and give assurance to our members.
We have agreed with government that we will no longer require an EWS1 form on buildings up to 18 metres once the Fire Safety Act has been implemented.
“This is because the act will require the building’s owner to perform all the relevant safety checks as part of the fire risk assessment. In future, assuming a building is deemed as safe in accordance with the act then we would be in a position to lend without further checks.
“The withdrawal of the consolidated advice note and the introduction of the PAS 9980 will further aid with this process. The safety of homeowners and renters remains our priority.”
Barclays: “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 EWS1 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.”
Lloyds: “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 RICS as they update their specialist guidance, which should provide the certainty everyone needs.
“We also look forward to seeing the details of the government loan scheme that will provide residents support if they need any cladding-related remediation. We expect the government’s action will help further unlock the housing market.”
TSB: “Following the changes put forward, we are waiting for RICS to develop its guidance and similarly to the rest of the industry, we will review how we apply it.”
Virgin: “There is no immediate change to our approach for requesting EWS1 forms following the announcement by the government.
“We are, however, working with our valuation partners and with industry bodies as to when an EWS assessment should be required. At this stage though we are unable to commit to a timescale for any potential change.
“As a responsible lender, we will be cautious in our approach to lending on properties that may be exposed to unsafe cladding in the external wall system to protect new customers.
“However, we will consider new applications where we receive information and reassurance regarding the impact of remedial works on the property’s valuation, by obtaining a completed EWS1 form. This form enables a building owner to confirm that their EWS has been assessed for safety by a suitable expert.
“Without this confirmation we would be unable to issue a mortgage to a new customer.
“We will continue to support existing customers by allowing them to switch to a new deal regardless of their property.”
Yorkshire Building Society: “We understand some flat owners are facing an incredibly difficult situation with regards to issues around cladding and fire safety. Homeowners dealing with the very real impact of this crisis deserve a timely and fair resolution.
“Our policy has not changed – we will continue to rely upon our valuers to decide when they feel an EWS1 form would be appropriate, so that they can avoid asking for them unnecessarily, whilst also not passing responsibility for any significant fire risks on to potential purchasers who might not be aware of the full extent of the risks. We will continue to work with UK Finance, the Building Societies Association and RICS on this issue.”
Coventry Building Society: “In all scenarios we would be guided by the latest RICS guidance and would rely upon valuers’ expertise on whether an EWS form is required.
“We welcome the expert panel’s view there is no systemic risk from fire in medium and low-rise blocks.
“We also welcome the actions the government is going to take including the withdrawal of the current consolidated advice note on cladding and urge them to continue to work with with relevant stakeholders to ensure all documents, including RICS guidance, aligns with views of expert panels.
“Once these changes are made both borrowers and lenders will be in a clearer position and know what is expected of them.”
Sign up for our fire safety newsletter
Already have an account? Click here to manage your newsletters
