Joe Arnold

How will safety reforms impact valuations?



Amid the noise about Covid-19, you may have missed the news at the beginning of April that the government announced some of the biggest changes in a generation to safety standards in high-rise buildings.

So, what are the considerations for developers, and how might these reforms impact valuations?

One of the interesting developments to emerge from the announcement is the size of buildings that are to be included in the reforms.

Properties have traditionally been considered to be high-rise at a height of 18 metres or more, which is the equivalent to six storeys. Following the Grenfell tragedy in 2017, surveyors have needed to confirm whether or not there is cladding on properties of this size and, if so, whether the cladding system has been identified as a fire risk.

This has not always been straightforward, but it was made easier earlier this year when RICS introduced a new External Wall Fire Review process. This requires a fire safety assessment to be conducted by a suitably qualified and competent professional to deliver assurance for lenders, valuers, residents, buyers and sellers. As part of the agreed process, only one assessment will be needed for each building, and this will be valid for five years.

The new measures announced at the beginning of April, however, include mandatory sprinkler systems and consistent wayfinding signage to be included in all new high-rise blocks of flats over 11 metres tall.

It was also revealed that the Housing Secretary would hold a roundtable with mortgage lenders to work on an agreed approach to mortgage valuations for properties in buildings that are under 18 metres tall, and so we may see further convergence of standards and processes.

Any developer who is working on a scheme of any height — and particularly those whose schemes will exceed 11 metres — should therefore pay close consideration to the new regulations and the available government resources.

The reforms are designed to incentivise compliance and to better enable the use of enforcement powers and sanctions, including prosecution where the rules are not followed, so needless to say, it is imperative to make sure you are correctly following the guidelines.

Completing a development that does not meet the required standards could result in a nil valuation, until the necessary changes are made. So, to ensure that you are proceeding in the right direction, think about forming a working relationship with a surveyor whom you can trust and can guide you in meeting the required regulations and achieving the best valuations for your schemes.


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