The RICS key to unlock the market?
In December 2019, the RICS launched a new form, the EWS1, to assist with the process of valuing properties within all residential buildings over six storeys (18 metres). In the wake of the Grenfell Tower tragedy, lenders were needing to understand whether materials used for cladding/insulation were safe and would require remediation at a cost that would have impact on the value of the property. The EWS1 form was intended to provide a quick route to ascertain whether works were required that might have an impact on value.History
While completion of the EWS1 is not a legal requirement, many lenders require the form before making lending decisions for both new mortgages and remortgages. Unfortunately, there have been many obstacles for home owners to overcome in order to obtain them, leaving them locked in to their properties.
In January 2020, MHCLG issued an advice note which recommended that all multi-occupancy and multi-storey high-rise buildings needed to be assessed for fire safety, which led to uncertainty about which buildings now required an EWS1 form. The lack of clarity resulted in a blockage in the housing market for those affected.
Since the EWS1 forms came into being in 2019, the RICS, lenders and other stakeholders have been focusing on whether it has been serving its purpose
There are a number of issues that have arisen since the inception of the EWS1 form. For example,: (i) there was a lack of certainty as to which properties require the EWS1 form; (ii) the number of people qualified that are available to provide them; (iii) the relevant insurance for those providing the forms, and (iv) the content of the forms themselves. As this has been at the forefront of market discussions, there have been a number of recent developments aimed at opening up the market and assisting surveyors in carrying out the assessments. We detail these developments further below.
- The RICS has yesterday provided a guidance note, following the consultation which commenced in January 2021, which it states is designed to "help valuers understand when an EWS1 form should be required due to visible cladding". This will hopefully help to 'unlock' the market and speed up the mortgage process. The RICS has indicated this guidance should be implemented by 5 April 2021. You can find the guidance note here. A supplementary information paper has also been produced in order to "increase surveyor's knowledge of typical external wall cladding systems for building types that may be considered in the External Wal Fire Review' process".
2. As well as this guidance, the RICS has confirmed that it will shortly provide consumer guidance for those purchasing and selling multi-story, multi occupancy buildings.
3. There were a limited number of people qualified to undertake the assessment required for the EWS1 form, and those surveyors were potentially exposing themselves to higher risks, such as claims regarding the completion/assessment itself and whether it was covered by their current insurance policy. A new training scheme was implemented in January this year, to ensure more people were qualified to carry out the assessment and provide the EWS1 forms. The RICS has indicated that it has secured funding to train up to 2,000 professionals within six months, which will dramatically increase the number of people able to carry out the assessments. Furthermore, RPC has been involved in discussion that have taken place with insurers in respect of the disclaimers and wordings that can assist the people providing those forms. You can expect further developments on this in due course.
4. As we set out in our previous article, insurers faced a myriad of claims in relation to fire safety and the minimum terms were amended. RPC has been drafting terms and conditions to assist and help protect those carrying out an EWS1 assessment and you can expect further updates in respect of our progress later in the year.
5. The RICS have updated the EWS1 form which can be found here.
6. In addition to the above, the Government is launching a PII scheme to support EWS1 process - The Ministry of Housing, Communities and Local Government (MHCLG) announced the move alongside its further funding for removing cladding. It said: “The government is aware that securing appropriate professional indemnity insurance to cover the completion of EWS1 forms is a major barrier to qualified professionals undertaking EWS1 forms".
We know this issue has been given the highest priority at RICS and RPC have been involved from the outset in developing ways in which this scheme can be improved.
The Regulatory Fire Safety Order, as amended by the Fire Safety Bill, will mean that all owners of multi-storey buildings will have to have a fire safety assessment. The EWS1 form may well then fall away as the buildings will already have had the requisite assessment. However, until it is place and all the buildings have had this assessment, the EWS1s are the way forward.