7 September 2020
Residential and rural property update - September 2020 – 2 of 4 Insights
Following the Grenfell fire disaster, the fire safety of high rise buildings has come under increasing scrutiny amid a drive for remediation of those buildings that contain flammable cladding.
The challenges and logistics of funding and organising the replacement of dangerous materials in blocks across both the social housing and private sectors have been well publicised. We've also seen a knock-on effect on asset values and the emergence of practical issues for those owning flats within affected buildings who wish to sell or mortgage their properties.
Building regulations have recently been updated and require new build residential high rise properties' external wall systems to be constructed of elements which are all of limited combustibility.
Previously, to comply with building regulations, a residential high rise property's external wall system didn't have to be constructed solely of elements of limited combustibility. Until recently, it was acceptable if the external wall system achieved BR 135 classification. This classification is achieved by undertaking a large scale test where a section of the exact external wall system installed is constructed, set alight and monitored. There are strict parameters to assess the heat and spread of fire; after analysing the data from the test, a qualified fire engineer can confirm whether the BR 135 classification has been achieved.
For existing residential buildings, the government has confirmed in its 2020 Guidance that if an external wall system has achieved BR 135 classification through the large scale test it should not need wholescale replacement. A "Fire Safety Professional with suitable experience" will need to investigate whether the external wall system has been correctly installed and maintained (for example, to ensure that all cavity barriers have been installed correctly). If the Fire Safety Professional is content with the installation, no remedial works will be required.
While in recent times these have been the only two ways to comply with building regulations, before the Grenfell fire, it had been industry wide practice to seek to show compliance with building regulations by asking a fire professional to undertake an "Assessment in Lieu of Test". These Assessments in Lieu of Tests were desktop exercises which were often not sufficiently rigorous and sometimes undertaken by individuals who did not have sufficient fire safety qualifications/experience to provide an informed opinion. It has become clear that there are a large number of high rise residential buildings which have been constructed with external wall systems which do not (and never did) comply with building regulations.
To restore confidence in the high rise residential buildings market, the Royal Institute of Chartered Surveyors developed the EWS1 form which came into use in December 2019. "EWS" stands for "External Wall System"; it records what assessment has been carried out on the external wall system for buildings of 18 metres or more above ground level "or where specific concerns exist".
Unfortunately, the EWS1 hasn't been the panacea that was hoped for. It was intended to assist lenders in making swift and informed lending decisions on flats within high rise buildings, but those operating in the market have experienced teething problems and frustrations with the process. These include confusion over which buildings actually require an assessment. The Housing Minister Christopher Pincher recently acknowledged that some lenders have been asking valuers to use the EWS1 form on a wider range of buildings than was intended. Lenders are apparently reviewing their policies and guidance to valuers to improve this.
The EWS1 form provides tick box options which either conclude that the fire risk of the external wall system is sufficiently low that remedial works are not required or that remedial works are required. If the latter, these works are itemised.
The form is valid for five years and covers the building as a whole; separate forms are not required for individual flats. It can only be commissioned by the owner of a building or the owner's managing agents, not individual leaseholders.
An EWS1 form can only be completed by a suitably qualified individual. The form provides guidance on what expertise is necessary and when signing the form, the individual must list their qualifications and self-certify that they are suitably qualified.
If no remedial works are required, then the fire safety of the external wall system should not impact the value of the property. Accordingly, lenders should be comfortable that the fire safety of the external wall system does not increase the risk of lending.
Lastly, it's important to note that the EWS1 form is not a replacement for the regulatory fire risk assessment required for common parts of a residential block of flats. This is still needed.
Previously, fire professionals were predominantly only considering new build properties, but since the Grenfell fire all high rise buildings have come under the spotlight. The increased scrutiny has also resulted in many contract claims being brought which require parties to instruct fire professionals to consider whether contractual obligations have been breached, as well as considering the safety of the building.
In short, there has been a huge increase in demand for professional fire services without the same increase in qualified professionals offering those services. Building owners have therefore found it difficult to obtain EWS1 forms quickly, even if no remediation is required.
EWS surveys are also expensive and the cost will need to be passed on to leaseholders through the service charge. Some managing agents have been slow to react to the current requirements, possibly amid concerns over collecting the cost. This has meant that many leaseholders have been unable to sell or re-mortgage their properties; mortgage offers have been withdrawn due to the delay in inspections being undertaken. It's hoped that the backlog of properties will decrease as the publicity surrounding the importance of fire engineering encourages more individuals to gain experience in this industry, but this won't happen overnight.
The main frustration experienced by leaseholders over the EWS1 process is that there's no statutory requirement on a building owner to procure an EWS1. This means that leaseholders have had no recourse if their landlord or managing agent refuses to initiate the EWS1 process for the building, effectively blocking any sale or mortgage. In these situations, the RICS has suggested that advice should be sought from the local council or the Fire and Rescue Service, but with no statutory footing, they are unlikely to be able to bring to bear too much pressure. This is a fundamental flaw of the current system that should be addressed.
If you have questions or concerns related to the EWS 1 form, please reach out to a member of our Residential and Rural property group for more information.
by Multiple authors