Leasehold flat ownership in England: when will we see an end to unsafe cladding?

It is fair to say that the cladding crisis in the UK in 2021 is an ongoing legal, financial and social emergency that has followed the tragic Grenfell Tower fire in 2017.

The Grenfell tragedy has highlighted the issue of the existence of large numbers of buildings which had been clad in dangerously combustible materials, comprising a combination of flammable cladding and flammable insulation.  In addition to dangerous cladding, many buildings have also been found to be non-compliant with other fire-safety building requirements, such as missing cavity barriers around windows or lack of fire barriers, which are designed to prevent fires from spreading into neighbouring flats.

This prompted the Ministry of Housing, Communities and Local Government (MHCLG) to establish the Building Safety Programme which, in the short term, was a scheme which sought to urgently identify and remediate buildings with unsafe cladding, and in the long term, led to a draft Building Safety Bill, published in July 2020.  For further details please see: https://www.gov.uk/guidance/building-safety-programme

For the owners of flats in buildings which have been found to pose a real and immediate fire risk to their occupants, it has meant they have had to face extensive and costly remedial works and increasing buildings insurance costs. This has soon impacted their properties’ values and saleability.  This problem was further compounded by mortgage lenders who were struggling to quantify the fire risks posed by different buildings.  The upshot of this was that mortgage lenders for the most part decided to cease to lend money for the purchase of many properties in England, unless their owners could prove the building is safe by providing the EWS1 form.

What is a EWS1 form?

The EWS1 form is designed to be used for residential properties such as blocks of flats and includes flats of social housing providers as well as privately owned, student accommodation (including houses in multiple occupation), dormitories, care homes and assisted living.

The EWS (External Wall System) process, and the resulting EWS1 form, is a prescribed way for a building owner to confirm that an external wall system on residential buildings has been assessed for safety by a suitable expert and in line with government guidance.

The EWS1 process delivers assurance for lenders, valuers, residents, buyers and sellers.

The form was originally created to ensure residential buildings over 18m tall could be assessed for safety to allow lenders to offer mortgages. 

However, further changes in Government advice in January 2020, brought all residential buildings potentially within scope, which created more worry and uncertainty for flat owners.  

March 2021 RICS Guidance

A further call for clarity from property industry professionals has led to the RICS (The Royal Institution of Chartered Surveyors) publishing further guidance for valuers on 8 March 2021. This guidance is expected to be implemented as soon as possible and by 5 April 2021 and further details can be found here:

https://www.rics.org/globalassets/rics-website/media/news/news–opinion/fire-safety/valuation-of-properties-in-multi-storey_-multi-occupancy-residential-buildings-with-cladding.pdf?domain=rics.org

This guidance includes set of criteria which are intended to be used to assist with the assessment decision as to whether a particular building should need an EWS1 form. Amongst others, the criteria considers the height of the building, the type of cladding and (in some circumstances) how much of it there is on the building. There are also additional criteria relating to balconies and combustible materials.  

The main point is that a valuer should always have a rationale to justify the request for the EWS1 form and the criteria should hopefully assist with that.

The Government’s initiative – what’s next?

On 31 January 2021, the Government opened a Waking Watch Relief Fund of £30 million. This is aimed to pay for buildings to install alarm systems consistent with evacuating residents in the event of a fire rather than them staying in place.

On 10 February 2021, the Government has announced a five point plan and £3.5 billion cladding replacement fund which would pay to remove unsafe cladding from buildings over 18 metres. 

For the lower buildings of 11-18 metres high, there will be no equivalent fund, but instead, the Government plans to provide a long term, low interest, government-backed loan-scheme which would enable the flat owners to pay to replace their cladding.

Regrettably, there has been no similar provision made or help offered for the owners of the lower buildings of 11 meters or under, which are affected by the remediation of expensive fire safety problems.

For more details see: https://www.gov.uk/government/news/government-to-bring-an-end-to-unsafe-cladding-with-multi-billion-pound-intervention

Summary

Whilst it is clear that the gravity of the situation post-Grenfell has not been underestimated by the Government, many believe that the steps taken so far are somewhat too little and too late…

Many leaseholders argue that this status quo has rendered their flats unsellable or even forced them into negative equity for many years to come.

Even for those who qualify for the Government aid, the problem is far from over as the process takes a long time i.e. the affected buildings must be assessed, plans drawn up for remediation and repairs,  applications for funding must be processed, planning permissions must be granted and appropriate contractors found to carry out the specialist  works.

This is still a very much developing situation where we appear to have only scraped the surface of what is undeniably an ongoing and a very vast problem.