Cladding/EWS1 Form – What’s it all about?
It is good news that the housing market can continue to operate, with appropriate safeguards, throughout this third national lockdown. People will be keen for their transactions to progress quickly so they can benefit from the Stamp Duty Land Tax savings that currently end on 31 March 2021. It is therefore important to address any potential delays at an early stage. One issue that has been causing delays on leasehold transactions is the need for Form EWS1.
What is Form EWS1?
EWS stands for external wall system. The external fire wall review form is intended to be a standard way of recording what assessment has been carried out for the external wall construction of residential apartment buildings over 18 metres OR where specific concerns exist.
Following the tragedy of the Grenfell Tower fire there has been a focus on removing combustible cladding from the external walls of high-rise buildings. The government issued guidance for building owners in December 2018 advising them to ensure that external wall systems were “safe”. Lenders became concerned that flats in high-rise blocks would not represent good security without external wall checks. Some surveyors valued flats at zero or significantly reduced values if there was insufficient evidence showing compliance with the government’s published guidance. Form EWS1 was introduced in December 2019 as a set way for a building owner to confirm to valuers and lenders that any external cladding system present had been assessed by a suitable expert.
What is the problem?
The Royal Institution of Chartered Surveyors (RICS) led a cross-industry working group in developing the EWS1 process and the aim was to help people buy and sell homes and re-mortgage. Unfortunately, difficulties in obtaining the form and issues with the form being requested more widely than originally intended has meant that its introduction has actually led to more delays and problems with transactions.
The form originally only applied to buildings above 18 metres (six storeys). It was subsequently amended to reflect the new consolidated Government guidance issued by the government in January 2020 (Advice for Building Owners of Multi-storey, Multi-occupied Residential Buildings) which states “The need to assess and manage the risk of external fire spread applies to buildings of any height.” Following this guidance the form was routinely being requested by lenders for lower level buildings. However, the guidance on the RICS website specifically states that the new guidance “…mean[s] some residential buildings below 18m which have ‘specific concerns’, may now require an EWS1” (emphasis added).
Therefore the form being requested without proper justification in some cases was one of the reasons for delaying transactions. In November 2020, the government issued a statement confirming that owners of flats in buildings without cladding will no longer need a EWS1 form to sell or re-mortgage their property. The government’s hope was that this would enable surveyors to take a more proportionate approach to when a EWS1 form was needed and estimated that this would benefit nearly 450,000 homeowners. It is a timely development to have this clarified although the RICS website has actually always stated that “not every building above 18m will require an EWS1 form – only those with some form of combustible material, making them unsafe”.
The November 2020 announcement also included government funding of almost £700,000 to train more assessors. This reflects the fact that there is an acute shortage of fire engineers to carry out EWS1 assessments with the resultant lengthy delays – even for those properties that are likely to receive a clear EWS1.
Although this funding is welcome, the government also need to find a solution to the lack of availability of Professional Indemnity Insurance (PII) for this work. EWS1 assessments will only be acceptable if they are underpinned with the necessary PII.
What can been done?
It is vital that at the commencement of any transaction involving these type of properties an assessment is made whether a form EWS1 is likely to be required. If it is, enquiries should be made immediately with the building owner to see if the building already has a form. It should be noted that forms are valid for five years but a new one may be required where a building has been altered.
An important point to be aware of is that the EWS1 process is for building owners to undertake – the form relates to the whole building and not individual flats within it. The provision of a form EWS1 is entirely discretionary and the building owner is not legally obliged to provide it. Although the government has expressed support for the EWS process, it has not made this a legal requirement.
As a consequence, a EWS1 is only likely to be available if the building owner was able to find a suitably qualified fire engineer and was able to pass the costs on to the leaseholders. The issue of who pays for the EWS1, which can be substantial, and any required remediation works if required is not always straightforward - you can read more about some of the relevant issues in our previous Q&A here.
We can expect to see further developments this year. The RICS recently launched a consultation on proposed guidance intended to improve consistency when EWS1 forms are requested. The consultation closed on 25 January 2021 with the proposed guidance note due in the Spring.