Stuart Collar-Brown, director at My Auction, provides insight into the support and options available for property owners with cladding and EWS1 form issues
Following the tragic events of Grenfell in 2017, where 72 people sadly lost their lives and hundreds of lives were devastatingly affected, cladding issues have been highlighted across thousands of properties across the UK.
Today, many flat owners of buildings with these cladding issues have been left in limbo, potentially unable to sell their property and becoming what many have described as ‘mortgage prisoners’.
Leaseholders have been left feeling trapped in properties with what initially seems like no way out and it is having a devastating effect on the mental and physical health of these individuals. A recent survey carried out on those affected reported that 1 in 5 respondents had been prescribed medication or had to take time off work as a result of the stress and anxiety brought about by the building safety crisis.(1)
With so much conflicting information available and no clear guidance from the Government, it’s no surprise that so many people are struggling. It’s incredibly difficult at present for homeowners to know what to believe, what solutions are available, and where they can turn to for support in the forever changing landscape of this controversial topic.
What doesn’t help is the fact that, since Gavin Barwell lost his seat as Housing Minister in the general election of June 2017 following the Grenfell disaster, the UK has had a different person in charge of housing policy every year since then. The total is now running at 18 different ‘leaders’ in the past 25 years. This is hardly the bedrock of stability and consistency for homeowners in the UK.
Unsafe cladding repair guidance
The current advice from Mr Gove (the current Secretary of State for Levelling Up) as of January 2022 is that no leaseholder living in their own flat will have to pay a penny to fix unsafe cladding and the old, proposed loan scheme for leaseholders in medium-rise flats will be scrapped. The industry was given two months to agree to a financial contribution scheme so an announcement around this is expected within the coming weeks.
This is clearly good news for leaseholders in the long-term because the initial guidance was that flat owners were going to have to foot large remedial works bills through hikes in their annual service charge payments. However, with the problem being no fault of their own, that would have been like penalising the owner of a second-hand diesel Volkswagen Golf for the ‘diesel gate’ emissions scandal and certainly wouldn’t have been the right course of action.
However, in the short term, there is still a large amount of uncertainty amongst homeowners as well as those involved in the house buying chain including solicitors, estate agents and financial advisors. If even the experts can’t navigate the requirements, how are the individual homeowners caught up in this meant to?
There is also currently no clarity on a timeframe for the repairs to be carried out. Currently, it could take whoever the responsibility falls on, months or even years to organise relevant inspections which could include boring holes in the roof or internal/external structure of the building. From there, it will take even longer for the reports to be collated, quotes to be obtained and of course for the work to be carried out.
Up to date EWS1 form
One thing that is abundantly clear for those looking to sell is the fact that a large proportion of lenders will now want to see the EWS1 (External Wall System 1) for properties in blocks of 18 meters or more in height.
In buildings of seven storeys or more, 50% of all mortgage applications in Q3 and Q4 of 2021 required sight of an up to date EWS1 form that had been signed by a professionally qualified inspector. Interestingly, during the same period, the number of lenders who requested an EWS1 form for leasehold flats in lower-rise buildings (one-four storeys) was only 2% so this further confirms much of the restrictions are being implemented by mortgage lenders.
For homeowners who are looking to sell a property facing EWS1 form issues, it is still possible to safely, and responsibly do this.
If there is an EWS1 form available it’s important to ask to see a copy. If the rating is A1 or A2 then the likelihood is, a buyer will be able to get a mortgage on the flat. Of course, this will depend on the lender however a mortgage broker should be able to provide the support required to find the most suitable lender for this.
If the rating is B1 or B2 then unfortunately the chances do drop dramatically. However, if the ratings are B1 or B2, it is worth looking into the fire risk assessment report to understand the severity of the problem and if the freeholder of the building has obtained quotations for rectifying the works. If quotes have been obtained review how much these works are likely to cost as well as timescales for said work.
If there is no EWS1 form then again, this is not a deal-breaker for leaseholders looking to sell. The sale will depend on the structure and height of the building. The main thing for homeowners to remember is that there is always a solution to the projected problems they face with no EWS1 form, a B1 or B2 rating. However, it is important that the homeowner gets the best advice from the correct professional.
Auctioneers chartered surveyors, fire risk assessment officers and solicitors are all well placed to give unbiased professional advice on this sensitive topic. These professionals may charge a fee for the advice however this would be money well spent if it saves the homeowner tens of thousands of pounds when it comes to selling their flat.
Due to the high volume of professional, chain free and cash buyers who purchase via auction, many of whom will take on properties with issues that have a long-term commercial view of ownership, a property facing EWS1 form issues is much more likely to sell by auction opposed to via private treaty sales. In fact, we have sold 100% of lots without EWS1 forms and/or with poor ratings so it’s important to remember that despite what the forever-changing guidelines are stating, there is still a way to sell your property, as long as it is done so in a safe and responsible manner.
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