Residential Property Partner Andrew Tress discusses EWS1 forms.
The housing market has been very busy during the Covid-19 pandemic. The Stamp Duty Land Tax holiday, pent up demand and an increased focus on living arrangements during lockdown have all contributed to a surge in transactions over the past eight months.
One issue that has been stopping some of those transactions from happening has been the need for an EWS1 form. The same issue has caused significant problems for people looking to remortgage their flat or to staircase their ownership of it. It has garnered significant media attention of late, with some flat owners being told that their property is un-mortgageable, some left stuck on standard variable mortgage rates, and others paying extortionate insurance bills where their cladding is deemed unsafe.
On Monday 25 January 2021, the RICS (Royal Institute of Chartered Surveyors) consultation on proposed guidance closed. The guidance, intended to improve consistency on when an EWS1 survey is required, is due to be published in the Spring. But what exactly is the problem?
What is an EWS1 Form and why was it brought in?
It is an ‘External Wall System’ survey. In the wake of the tragedy of the Grenfell Tower fire, there has been an understandable focus on the removal of similarly combustible cladding from the external walls of high-rise buildings. In December 2018, the government produced guidance advising freeholders to ensure that their ‘external wall system’ was safe.
Some lenders became concerned about high-rise buildings that did not have evidence of any formal checks having been carried out and, as a result, surveyors valued flats in such buildings far lower than they would have otherwise done. The EWS1 form was introduced in December 2019, partly in response.
So what’s the problem?
The form was brought in to overcome the issue, but in some ways, it just changed it. The form was originally supposed to apply only to buildings over 18m tall (roughly 6 storeys), but subsequent guidance widened the scope to include buildings under 18m which have “specific concerns” and that led to a far greater demand than could be met within a reasonable timescale.
The Professional Indemnity Insurance that assessors must have in order to provide these EWS1 forms limits the number of people who can carry them out, and there remains a tendency for lenders and surveyors to default to caution and request the forms, even where there is uncertainty as to whether they are required. In short, demand exceeds supply.
In November 2020, the government issued further guidance stating that buildings without cladding do not need an EWS1 form in order to sell or remortgage, which was designed to decrease demand for them. Funding was also provided to train more assessors capable of providing EWS1 forms, which will hopefully make them more available. However, for many, the problem persists.
What can be done if I am looking to sell or buy?
The most important thing from a conveyancing perspective is to establish as soon as possible (a) whether an EWS1 form is likely to be required, and (b) whether there is one already in place.
Technically, the EWS1 forms are for the freeholder or building owner to obtain, but there is conversely no legal obligation on them to have one, which is another part of the problem. Nonetheless, the forms are valid for 5 years providing no alterations have been made since the date of the assessment and the freeholder or managing agents will be able to tell you whether there is one for your building.
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