Back to the blogs list

What impact will the government EWS1 announcement have on leaseholders and lenders?

What impact will the government EWS1 announcement have on leaseholders and lenders?

Following new advice from fire safety experts that makes clear there is no systemic risk of fire in medium and low-rise blocks of flats, the government has announced that EWS1 forms will no longer be needed for buildings lower than 18 metres. Commissioned by the government, the new advice states that fire risks should be managed via alarm systems or sprinklers and buildings under 18m with cladding do not require remediation. But what will the impact of this have on leaseholders and lenders?

An EWS, or External Wall Survey, involves an assessment by a qualified professional who completes an ESW1 form that designates whether the external wall of a building, or attachments to the external wall such as cladding, are at low risk for fire. The form was introduced in December 2019, in the wake of the Grenfell Tower fire, with a focus on removing aluminium composite material from buildings over 18 metres. The result of the form is used by mortgage lenders in decisions relating to buying, selling, mortgaging and re-mortgaging properties within the specified building. If the ESW1 is requested by a lender, the property is rendered valueless until the form is completed and should the form designate that a building is at a higher risk of fire, mortgage providers will refuse to lend on it until remedial work is completed.

From its introduction, there has been widespread criticism of the EWS1. Not only was the process costly (costing anywhere between £10,000 and £50,000+) and often slow, the ESW1 was being used farm more than intended on properties where the necessity was questionable. Moreover, the costs for any remedial work to transact on properties were falling to leaseholders who often did not have the funds to afford. Compounded by a lack of qualified individuals to complete the form, it resulted in a backlog effecting up to three million homeowners trying to buy, sell, mortgage or re-mortgage their property. By revoking the need for an ESW1 on buildings lower than 18 metres, leaseholders in medium and low-rise blocks of flats with cladding will be able to sell or re-mortgage their home with greater ease.

As more lenders began to seek assurance on the safety of external wall systems as a condition of approving mortgage applications, an increasing number of mortgage applications were rejected and sales begun to fall through. The recent intervention will certainly restore some balance to the market, with HSBC UK, Barclays and Lloyds banking Group all committing to a review of their practices.



Property Consultants

Hi, thanks for visiting Jigsaw Property Consultants. Are you thinking of selling or letting your property?

Request Valuation