Not all sellers are equal

According to Rightmove, people searching for a home in a village jumped by 126% in June and July compared with the same period last year.
Not surprising if you’ve been cooped up in a smaller flat, with less space because you thought most of your time would be spent at work, you may very well be looking to be moving to somewhere larger and more spacious.
However, for many thousands of flat-owners across the UK, there are hurdles, and these are not of their making!  For those living in a purpose built block of flats if they want to sell-up or remortgage thanks to recent mortgage lender regulations, better known by the snappy title of the ‘EWS1 form’ thousands of sales are thwarted.
EWS stands for ‘external wall system’ which is a form now required by buildings that have materials on the façade that will ‘assist a fire’  The External Wall Fire Review process, or EWS1 form is stalling the sale of properties over six stories – and by virtue of the small print many lower rise buildings also.
Remediation can sometimes take years, adding to the time taken for flat owners to sell their properties.  It seems that man’s basic right to sell up and move is now thwarted.
Sometimes bad results start with good intentions. The EWS form is a response to the Hackitt Review which followed the Grenfell tragedy and Part M of the building regulations were updated late 2018.  The EWS1 intent was to identify buildings with combustible materials in the EWS (external wall system).  The aim being to quantify the problem, and prompt resolution.  So far the government has set aside a Building Safety Fund of £1BN – which all commentators asset is simply not enough, and it only applies to buildings over 18 metres.   Not only is there a shortage of professionals able to sign of the EWS1 form, if a block is unlucky and has a certificate B2 awarded, sales then stall as the very next question from the mortgage lender is ‘when will remedial works take place?’   For many their lives are on hold.
Further, as the EWS1 form basis is invasive tests many buildings are now failing on multiple counts provoking the question: ‘how could both Building Control and new build guarantee providers such as NHBC got it so wrong?’
And, for apartment owners in buildings less than 18 metres – the government has not offered any support – yet faced with an EWS1 Certificate B – these people not only cannot sell, but also have to find the money to rectify the building themselves!
As if dealing with COVID-19 was not enough, flat-owners unable to sell or remortgage their homes are faced with increased mortgage rates, while they continue the Kafka-esque process of obtaining an EWS1 form.
One might think that the expert investor freeholder would be arranging all this, but no, it is the leaseholders who foot the bill and often have to get it all arranged through their Management Company.  The burden of carrying this all out is often upwards of £5,000 and the current suggestion is that the form will only last for 5 years.  Service charge costs are spiraling in what appears to be another tax on leaseholders due to successive poor government when many of these materials could have been off our shelves years ago.
In short, leaseholders are left uncertain of their safety, out of pocket, and unable to move home.
Quite rightly homeowners feel it is unfair that they should have to pay to make their blocks adhere to safety regulations, while freeholders say the blocks adhered to the rules at the time they were built, so they shouldn’t have to pay either. Ultimately, this means both sides are looking to the government to intervene.
In July, Housing Minister Christopher Pincher admitted that lenders had been using the EWS1 forms more often than originally intended.  But unless the government changes the Regulations it issued in January which quite clearly state materials ‘should not assist a fire’ and that the regulations apply ‘at any height’ and that action to remove unsafe wall systems should be taken ‘as soon as possible’.  Well I say:  ‘Sir: how could you expect any other outcome?’
Just maybe, the situation may have improved now that the minister for building safety has held a roundtable with mortgage lenders, who agreed a more “nuanced approach to risk is required, but it will not be until October 2020 that the RICS has promised updated guidance.
In the meantime, the government should be looking to outlaw mortgage lenders from increasing interest rates during a mortgage whilst waiting for their EWS1 form, or remediation – this is pure unnecessary profiteering.  Developers to take a more active role in supporting retroactive EWS1 investigations, and if the developer is not responsible for what they have built – then surely government or private building control must be to the extent that a combination of materials were inappropriate together, and either the January 2020 MHCLG Regulations need revising to remove the need to carry out remedial works on buildings under 18 meters, or, the government needs to stop discriminating against leaseholders in low rise buildings and pick up the tab too!
Mary-Anne Bowring is group managing director at property consultancy, Ringley Group


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