After recognising that nearly half of its client base could be impacted by EWS1 issues, the specialist risk brokerage reached out to its network of surveying partners to formulate a solution for its clients.
The project is being spearheaded by insurance and property expert, and senior broker at London Belgravia, Tomek Stabrawa (pictured above).
“EWS1’s have changed the landscape for mortgage applications, with many developers not knowing of potential issues until exchange approaches,” said Tomek.
“The expectation is that more lenders will require a clear EWS1 form for all buildings above 18m, with some requiring this for buildings below 18m, too,” he added.
“This is likely to include all multi-storey and multi-occupancy buildings in time.”
Since introducing the solution, London Belgravia has successfully helped its clients secure the service on a number of projects, with many on tight timeframes.
The brokerage has, in some instances, been able to complete the process within 10 working days from commitment.
Jack Bristow, commercial director at London Belgravia, commented: “We were quite conscious about launching another service following the recent introduction of our finance and renewable insurance divisions.
“However, given the number of developers we work with that have EWS1 exposure, it quickly became apparent [that] it was necessary for us to help clients navigate this challenge.
“I’ve been delighted by the timely manner in which we have been able to find an appropriate solution.”
What are EWS1 forms?
After the Grenfell Tower fire in June 2017, there has been a focus on removing aluminium composite material (ACM) from buildings over 18 metres.
Over time, this has broadened to take in other types of combustible cladding.
In 2019, mortgage providers began to require assurances about the safety of external wall systems as a condition of approving mortgage applications.
Surveyors took the view that flats in blocks without a certificate showing compliance with Advice Note 14 had a value of £0 or significantly less than the asking price.
- An interview with Brickflow co-founder Ian Humphreys
- Developer saves over £500,000 in funding costs with deposit release bonds
- London Belgravia introduces surety product that allows developers to utilise off-plan deposits
As a result, an increasing number of mortgage applications were rejected, and sales started to fall through.
In response, the RICS led a cross-industry working group to consider best practice in the reporting and valuation of tall buildings within the secured lending arena.
The External Wall Fire Review process, commonly referred to as EWS1, was agreed by the industry in December 2019.
The process requires a fire safety assessment to be conducted by a suitably qualified and competent professional, delivering assurance for lenders, valuers, residents, buyers and sellers.
Since its introduction, flat owners seeking to sell or remortgage their homes found that lenders have asked for an EWS1 form.
EWS1 forms are not a statutory requirement, however, lenders may refuse a mortgage application where one cannot be produced — this is said to be a commercial decision.
Only one assessment is needed for each building and is valid for a total of five years, however where buildings are altered, a new form may be needed.
On 21st November 2020, an agreement was reached between the government, RICS, UK Finance, and Building Societies Association, so that owners of flats in buildings without cladding would no longer need an EWS1 form to sell or remortgage their property, clearing the way for up to nearly 450,000 flat owners to sell, move or remortgage their homes.
While building owners are already legally required to undertake fire risk assessments on all blocks of flats, following supplementary guidance recently published by the government, RICS will be working with lenders, valuers and fire safety bodies to develop new advice for surveyors.
This will enable surveyors to take a more proportionate approach and reduce the number of buildings where an EWS1 assessment is needed.
The government has also pledged nearly £700,000 to train more assessors to speed up the valuation process for homeowners in cases where an EWS1 form is required.