The tragic 2017 Grenfell Tower fire increased the concern over the use of combustible materials and the risks that they posed to residents in buildings over 18 metres. It has been noted that the problem is not simply the ACM cladding but potentially the entire external wall system. This problem is currently affecting thousands of Scottish residents.
Repairs are expensive, averaging between £40k- £50k per flat, with larger blocks of flats reaching millions. For these homeowners, premiums have increased and building insurance may become difficult to obtain: Many flats have become “unsaleable” and “unmortgageable” without the evidence of an EWS1 form.
The Seminar covered specific issues concerning the current Cladding Crisis in Scotland.
Watermans want to help buyers and sellers by being open and transparent with the information. At the end of the seminar, the panel answered your questions.
Cladding explained
Just one square metre of ACM with its core is equivalent to five litres of petrol. However, the Cladding Crisis is NOT just a concern over ACM cladding. Many homeowners were slow to react because guidelines initially stated that EWS1 forms were required for buildings 18m and above.
The Ministry of Housing Communities and Local Government advice was updated January 2020 that ACM is “a significant fire hazard”, HPL Class C&D “noticeable fire hazard” and that external additions such as balconies, which contain combustible materials can be a “source of rapid-fire spread”. Most importantly that materials on buildings can still be dangerous “irrespective of the height of the building”.
Other types of cladding common on high rise buildings include:
- High Pressure Laminates (HPL)
- Timber Cladding of various kinds
- Laminated Glass
EWS1 Form:
In Scotland, the property holder must supply an EWS1 form (an external wall safety form) which will confirm whether combustible materials are present in the external system and, if so, whether repairs are necessary. It is a simple “tick box report” but an essential financial risk tool necessary for mortgage lenders.
An EWS1 form expires after 5 years. So, unless legislation changes, a buyer will need to pay for a new form if they want to sell or remortgage in the future
When an EWS1 Form is Needed:
- Buildings over 7 storeys and above with any cladding on external wall system and balconies linked to combustible materials
- Buildings 5-6 storeys with MCM, ACM, or HPL cladding on external wall system. Or other cladding, such as timber, being 25% or more on external system
- Buildings 4 storeys or less with ACM, MCM, or HPL cladding or equivalent
- Balconies are only relevant for 5 storeys and above if they contain a substantial amount of combustible materials stacked above each other
In practice, UK Finance and lenders are taking the position of “better safe than sorry.” Although the Scottish Government have pledged money for unsafe cladding repairs, there has been no timescales released.
How is the EWS1 Form Completed?
- EWS1 forms are completed through an inspection.
In Scotland, as the common parts of the building belong collectively to the common owners, fire risk assessors and surveyors do not have permission nor a legal duty to remove panels. Therefore, unless specifically requested by the Factor, most inspections are simply visual rather than destructive.
The EWS1 Form gives a rating of A1, A2, A3, or B1. Receiving a satisfactory EWS1 form for a lender allows you to sell or remortgage your property. A B2 rating unfortunately means that you cannot sell your property until repairs have been made.
Ratings Explained:
A1: There are “no attachments whose construction includes significant quantities of combustible materials”
A2: There is “an appropriate risk assessment of the attachments confirming no remedial work required.
A1 and A2: Accepted by Lenders
A3: Where neither A1 nor A2 apply, there may be potential costs of remedial works to attachments. Such as stacked timber balconies.
B1: Indicates that “the fire risk is sufficiently low that no remedial works are required”
B2: Concludes that “an adequate standard of safety is not achieved”
Category B1 is only acceptable if the expert is a Chartered Fire Engineer via the IFE and have CEng post nominals.
EWS1 Form Tips:
- Double check the form has been filled out correctly and legible
- Make sure that the form is the correct version (December 2019)
- The Addresses should be correct
- Ensure that the form is signed by a qualified assessor
- Be aware of fraudulent forms
Cost of EWS1 Forms:
Costs vary depending on the specialist instructed and if the report is carried out for an individual or for the entire block
In Scotland, fees start from £525+ VAT per property and go up to £3,500 + VAT per property
Challenges with the Scottish Cladding Crisis
- Lack of qualified assessors, especially B1. There are an estimated 85 specialists throughout the UK. See a full list of Fire Risk Assessors on the Fire Sector Federations Website
- Evolving requirements but a lack of communication and clarity.
- Under 18m included in the EWS1 form requirements meant that there was an increase in the number of properties affected and this put a strain on the limited specialists available to prepare EWS1 forms. Therefore, waiting times are lengthy.
- There have been issues obtaining mortgage lending for those with B-Ratings
Selling Your Property with Cladding:
Cladding, EWS1 Forms and Property Sales:
This is a difficult situation for all affected and unfortunately, it looks as though it may take years to find a solution suitable for everyone. Although we may not have all the answers right now to fit everyone’s circumstances, Watermans want to help where we can.
Watermans’ Head of Property, Tzana Webster, urges those affected to be proactive and to act sooner rather than later. Do not wait on the Scottish Government to act. If you are in a block of flats, group together and coordinate with other homeowners to start the research. Report issues to Residents Association and to your Factor as soon as possible. However, Factors are there to act on behalf of homeowners not for homeowners.
Question: 100% Homeowners Approval or Majority?
Check your title deeds, Factors and Residents Association to see what they specifically say. Usually, decisions about improvements require a unanimous decision.
Tips and Advice for Homeowners who want to sell:
- Choose an agent experienced with cladding, and one that isn’t afraid to talk about cladding.
- Ask the agent if they are actively involved and knowledgeable in the cladding situation, and if they are training their teams about cladding.
Knowledgeable agents will not only be able to provide homeowners with advice on pre-sales and marketing, but they will also be confident when speaking with buyers to pass on information.
Question: Has the Cladding Crisis affected sale prices negatively?
Those with EWS1 forms are achieving successful sales in Scotland and are achieving strong prices from their sale. Watermans want to mute the clickbait on “unsellable” “unmortgageable” homes.
Hints and Tips from a Mortgage Advisors Perspective:
-Lenders will always be led by the Chartered Surveyor, so it is best to get your EWS1 form completed as early as possible when buying, selling or remortgaging. The lenders are driving the conversation and the requirements with buyers who require a mortgage.
Freehold vs Leasehold: In Scotland, because of freehold, each property owner needs to obtain their own individual EWS1 form. There are discussions with RICS and UK Finance about trying to arrange for the buildings or property manager to get just 1 report for a building in Scotland, but this has not yet been agreed and as it stands currently, each owner must get their own form.
Question: What can your Mortgage Advisor to help property buyers and homeowners remortgaging?
- As soon as you find a property that you’re interested in and know it has cladding, speak with the selling agent and request a copy of the EWS1 Form. (Be sure to check the back of the Home Report Survey, as many sellers have these uploaded on the back of the document) Then speak to your Mortgage Advisor and solicitor to make them aware that you’re looking at this type of property,
- Check with the lender that the qualifications of the specialist who prepared the EWS1 form are suitable with the lender before submitting the mortgage application
- If you want to raise money for home improvements or for a deposit to buy another property, product options would be restricted to additional lending through your existing mortgage provider at potentially higher interest rates, when the overall cost of remortgage elsewhere could be cheaper.
New RCIS Guidance coming in April 2021 for buyers and sellers should hopefully speed up mortgage approvals as it will help to identify more properties that do not require further inspection.
Question: Will I still need an EWS1 Form when the new RICS Guidance comes out?
If the lenders are still demanding EWS1 Forms for properties, despite the new guidance, for property owners to sell or remortgage, the EWS1 form will be required. It is best to stay flexible.
Buying a Property with Cladding:
Advice: Be prepared, have the EWS1 Form available from the start to ensure there are no delays within the transaction.
Many solicitors acting for interesting buyers want to review the EWS1 Form for a property that is advertised for sale at the outset, when their client expresses interest, so they can flag up any potential issues to their client as soon as possible. E.g. Form ratings.
Helpful Tips on Buying a Property with Cladding or an EWS1 Form
- View your properties, when possible.
- Ask about cladding and EWS1 forms
- Do your research and contact your Mortgage Lender
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Act fast, contact solicitor to submit an offer
- Take advantage of First Home Fund and Lift schemes to help you towards your first purchase.
The Panel Answered your questions
Can a homeowner challenge the need for an EWS1 Form if it’s stated in the Home Report Survey or Valuation Report?
Scottish guidelines state that an EWS1 form is required. Alternatives are currently still being debated.
Is there a central portal or information centre that homeowners can check a building’s status regarding EWS1 Forms, or are the buildings assessed on a case-by-case scenario?
Most surveying firms will have their own portal for blocks and their ratings. However, there is no central portal.
Is an EWS1 form required for new build properties?
A new build should not need an EWS1 form due to a change in regulation which states that no combustible materials should be used in building the property.
Although there is no Home Report that immediately identifies an issue, it cannot be taken for granted that there isn’t an issue.
Why won’t many surveyors comment on the EWS1 form?
RICS Guidance states that surveyors are not supposed to comment on the form but as A1s, A2s, and B1s are what the lenders are lending on. The lender will send surveyors a pdq which accepts the rating.
Why is a chartered engineer required for a B1 or B2 rating?
The decision was made by the Institution of Fire Engineers A B rating indicates that there are combustibles in the external walls. They felt that these qualified chartered engineers were the most qualified to give their opinion on the rating.
Is the EWS1 form encouraged by the law society to be extended over to the purchasers and/or their lenders. Who pays for that?
The solicitors will act in the best interest of their clients. Some see the advantages of the form being in the buyer’s name because it will be the buyer who owns the property. They will need that EWS1 form in order to apply for any fixed rate mortgage deals or home improvement loans. Especially if they sold the property within that five-year term. This is an idealistic view. However, for insurers, they will not provide that cover to a third party. So, a second EWS1 form would need to be commissioned.
We would like to thank Tzana Webster, Shawn Wood, Mike Horne, Paul Nelis, and Mark Wallace for taking the time to speak with us and for their participation in such an informative seminar. Read more about the Scottish Cladding Crisis Seminar.