In its latest decision, the government found “there is no systemic risk of fire in these blocks of flats”, therefore there is no need for EWS 1, the document designed to verify whether a building is safe or not following the Grenfell Tower fire in 2017.
The decision marks a major breakthrough for the industry and is backed by the National Fire Chiefs Council and the Institution of Fire Engineers.
Lenders and borrowers alike had become exasperated by the market-wide “log jam” these forms were creating.
Many leaseholders had found themselves “stuck” in properties deemed undesirable by lenders due to the risk of huge cladding removal bills - some estimated at as much as £70,000 - lingering over them.
Now these high street lenders - HSBC UK, Barclays, and Lloyds Banking Group - have committed to reviewing their practices following the government’s new advice to “further unlock the housing market”.
Housing secretary Robert Jenrick said on Wednesday (June 21): “While we are strengthening the overall regulatory system, leaseholders cannot remain stuck in homes they cannot sell because of excessive industry caution.”
Jenrick had commissioned a group of independent experts to review the fire risks associated with these shorter buildings which may have been built with “unsafe” cladding.
They found the “risk aversion” appetite currently held by the mortgage and insurance markets was “unjustified and unnecessary” for blocks of flats below 18 metres, and that the “significant and costly construction works” involved with “encouraging or even mandating EWS1 assessments” was not worth the actual fire risk these buildings posed.
Jenrick’s group of experts included Dame Judith Hackitt, former London Fire Commissioner Rob Dobson, Sir Ken Knight, and the former chief fire officer Roy Wilsher.
The housing secretary added the government had “already agreed with many major lenders that lower-rise buildings will no longer need an EWS1 form, and the presumption should be that these homes can be bought and sold as normal”.
Consistent approach
British lenders, which are represented by trade body UK Finance, are now calling on the government to make its approach consistent across the industry “to ensure all documents, including the Rics guidance, align with the views of the expert panel”.
Previously, lenders have struggled to follow certain rule changes because of the perceived misalignment between government legislation and guidance spelled out by third-parties.
With cladding removal on shorter buildings no longer a necessity, the independent advice Jenrick commissioned suggests “measures such as alarm systems or sprinklers” should suffice - meaning “the overwhelming majority of medium and low rise buildings with cladding should not require expensive remediation”.
This means some shorter buildings may still require remediation. For buildings under 18 metres which do require remediation, the government said it “will introduce a financing scheme so that no leaseholder will have to pay more than £50 a month for the cost of replacing unsafe cladding”.
The financing scheme, first announced back in February, is yet to materialise.
The government is already fully funding the removal of unsafe cladding on all buildings over 18 metres through the £5bn Building Safety Fund.
For high-rises, the government has also set out plans for developers in England to contribute to the cost of remediating safety defects.
Chairman of the National Fire Chiefs Council (NFCC), Mark Hardingham, dubbed this “a major step towards ensuring industry contributes to righting the wrongs of the past”.
The levy will be applied when developers seek permission to build high-rise residential buildings, with the money recouped used to fix historic fire safety defects, including unsafe cladding. The government is currently calling for views on the proposed design of the levy.
