Reviewed 4 August 2021
CLADDING, FIRE SAFETY AND RE-MORTGAGING, STAIRCASING OR SELLING YOUR HOME
Introduction to New Government Safety Guidelines
Since mid-2019, mortgage lenders have been asking people seeking to buy, staircase or re-mortgage properties in some apartment blocks for independent certification that the building meets new government safety guidelines.
Unfortunately, this means that in some cases it may not be possible for leaseholders to re-mortgage, staircase or sell their homes until this independent certification can be provided. In some cases, the independent certification cannot be issued until significant work (for example, re-cladding) is completed.
Like many landlords, we have several properties where there is a known issue with the building, which we are dealing with prior to the issue of a satisfactory EWS1. We also have some buildings where an issue has now been identified through the EWS1 intrusive inspection process. Due to the limited availability of suitably qualified inspectors and delays due to Covid-19, we also have buildings where there may not be an issue, but we have yet to complete the independent inspections and reports to verify that no further work is required.
We acknowledge that this has had a life-changing impact on the lives of many of our residents, who in the absence of a satisfactory EWS1 certificate, have had their plans to sell, re-mortgage or staircase their homes disrupted. We apologise for this. Swan is treating this issue with the highest priority and our teams are committed to supporting you through what unfortunately is likely to be a longer process than anyone would wish.
We’ve set out below why this is happening, what Swan is doing, and what help you are entitled to.
Why has new guidance been issued?
Following the tragic fire at Grenfell Tower in 2017, the Government changed its building safety guidelines by issuing a series of advice notes. These advice notes were intended to give building owners clear guidance on how to make sure that their properties are constructed and maintained safely.
In 2019, mortgage lenders and valuers began asking people who applied for mortgages on properties in some apartment blocks to provide independent certification that the building met the requirements of government Advice Note 14.
This Advice Note stated that all materials used in the construction of the external walls of high-rise buildings (buildings over 18m high – about six storey and above) should be of limited combustibility (or have passed certain safety tests) and have been installed and maintained correctly.
These requirements were not in place when the blocks were built. This means that in most cases, to prove that a building meets the new requirements, building owners must now go back and undertake complex intrusive inspections (which involves opening up multiple walls to check the materials they are made of), carry out safety tests, and then, in some cases, complete remedial works. Only then can building owners obtain the certification that mortgage lenders are asking for.
A new form, called an EWS1, was introduced in December 2019 to try and help building owners provide the certification more easily. However, in most cases, this still requires the same process outlined above.
In the short-term at least, this means that many building owners, including Swan can’t provide the certification that mortgage lenders are asking for.
In January 2020, the Government consolidated its Advice Notes into a single document. This did not fundamentally change most aspects of the previous guidance. However, it did say that it should now apply to apartment blocks of four storeys and above where combustible cladding is in place, which has increased the number of blocks which now need an EWS1 certificate.
What is Swan doing to address the situation?
Swan began a programme of initial surveys in 2019, starting (in line with government advice at the time), with all our blocks over 18m (six storeys) in height. In April 2021, Swan’s programme of inspections then increased to include blocks below six storeys with, for example, ACM, MCM or HPL panels on the building in line with the RICS guidance.
These intrusive EWS1 surveys check that materials used in the external wall system of a building meet the new building control fire safety standards. However, because it is so intrusive, this is a slow process which has been further delayed by the Covid-19 pandemic.
We have established a dedicated Building Safety team to prioritise this work and we are working with our advisors to get the EWS1 certificates issued as soon as possible. From early 2021, we have seen our EWS1 programme accelerate, with the appointment of additional fire safety advisors. This is, however, a national issue, and there are a small number of qualified assessors in the UK who can sign off the final certificates, so progress will continue to be a challenge. With the need to undertake additional external investigations, a full review of products used in the original construction, a detailed review of health and safety files, and to complete a full assessment of the drawings for when properties were originally built, these reviews take a long time.
Given that Swan owns so many buildings affected by the guidance, we are not able to inspect, test, and then carry out works on them all at once. Instead we have prioritised our buildings based on risk. Our highest risk buildings, defined by height, occupancy and building materials, among other factors, were inspected first. We now continue to inform residents about the timescales for an inspection of their building where applicable, as we work through our programme. Like other landlords, through these intrusive surveys, we are identifying several buildings where further work may be required and will we progress this as soon as possible. However, where the EWS1 survey identifies the need for further works, this is the start of a process which then requires further expert analysis to review what measures are needed and, in many cases, does require significant work which will take time to complete.
Does this mean that affected apartment blocks are unsafe?
It does not automatically mean that a building is unsafe if the owner cannot provide the certification being requested by a mortgage lender and it is not yet a legal requirement for a building to meet the conditions of the new building safety guidance.
However, lenders may still take the view that if independent certification cannot be provided to demonstrate compliance, they won’t offer a mortgage.
We would like to reassure our residents that all the apartment blocks that are owned in freehold by Swan have:
- received Building Control sign-off at the time they were built;
- an up-to-date fire risk assessment (FRA) – we review these each year for our high-rise blocks (regardless of their height) and any recommendations are dealt with immediately or put into a programme of work to be completed as soon as possible;
- if any EWS1 outcomes require additional safety measures to ensure residents safety during the remediation process, for example a waking watch, our teams will follow our expert assessors’ advice and put this in place.
Can I get copies of the FRA or other reports and related documents?
We understand why our residents may request information for their blocks. However, in line with legal advice received, we are unable to provide copies of the FRA report or other associated documents due to potential litigation issues with various parties.
What is the process of remediation?
The process for remediation can be lengthy and we have appointed project managers to oversee this process that includes:
- procurement of forensic investigation of the building
- production of a scope of remedial works
- procurement of a professional team
- formal approach to the original contractors/sub-contractors/designers
- development of a design for the remedial solution
- production of a cost estimate and programme of works
- review of cost to ensure value for money
- tender exercise
- award of contract – only at this point will costs be confirmed
- delivery of works
In line with Swan’s communication strategy, we will maintain communication with residents throughout the remediation process through newsletters, FAQ’s and specific updates when contract works commence on site.
How long will this all take Swan?
Given the extent of the Government guidance, it is likely that there will be buildings requiring some degree of remedial work, and so we anticipate that our programme of inspections, testing and remedial works is likely to take several years to deliver.
The Government realises that this is the case for many building owners like Swan. Along with our colleagues in the sector, including the National Housing Federation and the G15 (a group of the largest housing associations in London), we have been calling on the Government to reassure residents that they will not need to fund any expensive works required. We’ve also asked that they give building owners a reasonable timeframe in which to resolve any outstanding issues and work with mortgage lenders, valuers and insurers to collaborate and find a solution to enable the market to function. We continue to work through the implications of recent government announcements on Fire Safety work funding to analyse what additional funding may be available.
In the meantime, we would like to apologise to those residents who will need to wait for their building to be inspected – we understand how difficult this situation is for you.
Our teams continue to offer various types of support to residents who may find themselves unable to staircase, re-mortgage or sell their home (see below).
What will you do if I can’t sell/staircase/re-mortgage my property?
We want to do what we can to support leaseholders whose mortgage application or sales process has been disrupted as a result of the approach that lenders are taking.
Some homeowners paid money to us to cover administration or application fees while trying to sell, staircase or re-mortgage their home. We’ve already issued refunds for these fees to the homeowners we know have been refused a mortgage as a result of the new guidance.
In addition to this, if you began a sales or re-mortgaging process which was stopped from progressing by your or your buyer’s lender, we will waive our administration fees
Should you wish to begin this process again once the necessary certification has been obtained, we will honour this for up to two years after certification is obtained. (Please note that this offer does not include the resale nomination fee, which we are obliged to charge as a condition of the lease, however it does include valuation and landlord’s enquiry pack fees.)
If you believe you’re entitled to a refund and haven’t received one, please contact our Leasehold team on 0300 303 2500 or our Hera team on 0345 683 8812.
We are advising any leaseholders who would like to re-mortgage, staircase or sell their home to seek advice directly from their lender or mortgage broker before beginning this process.
EXTERNAL WALL SURVEY (EWS) EXPLAINED
What does EWS mean and what is the process of obtaining one and what does an EWS assessment entail?
EWS means External Wall Survey. This is a survey that assesses whether the external wall system contains materials that are combustible, offering clarity to lenders and peace of mind for homeowners and buyers. To get the form, landlords must employ a suitably qualified fire engineer (who are in short supply) to carry out a survey of the building’s external walls. It can involve opening-up multiple areas in walls to check the materials that they are made of and produce a report.
In some cases, the EWS survey identifies that external walls will require remediation.
Why do I need an EWS1 form?
Lenders may request an EWS1 form before they are willing to offer any financial products. The form will confirm to them whether the building complies with the current guidance.
What is the guidance for when an EWS1 form should be required?
In April 2021, the Royal Institute of Chartered Surveyors (RICS) updated their guidance regarding when an EWS1 form should be required. Previously limited to buildings over 18m (6storeys), the guidance was extended to consider lower rise buildings as follows:
For buildings over six storeys, an EWS1 form should be required where:
- there is cladding or curtain wall glazing on the building or
- there are balconies which stack vertically above each other and either both the balustrades and decking are constructed with combustible materials (e.g. timber) or the decking is constructed with combustible materials and the balconies are directly linked by combustible material.
For buildings of five or six storeys, an EWS1 form should be required where:
- there is a significant amount of cladding on the building (for the purpose of this guidance, approximately one quarter of the whole elevation estimated from what is visible standing at ground level is a significant amount) or
- there are ACM, MCM or HPL panels on the building* or
- there are balconies which stack vertically above each other and either both the balustrades and decking are constructed with combustible materials (e.g. timber), or the decking is constructed with combustible materials and the balconies are directly linked by combustible materials.
For buildings of four storeys or fewer, an EWS1 form should be required where:
- there are ACM, MCM or HPL panels on the building.
Recent Government announcement – EWS1 requirement for buildings below 18m
On 21 July the Government made a fire safety announcement in response to an independent report by a team of fire experts appointed by the Government earlier this year. Overall it called for a more risk proportionate approach to fire safety in blocks of flats.
The advice recognised that many residents were experiencing distress and anxiety as they have been held back from selling their homes and moving on with their lives because of excessive caution in the lending surveying and fire risks assessment market.
The government advice recommends that EWS1 should not be a requirement on buildings below 18m. Rather, cost effective mitigation measures should be considered first. Major lenders such as HSBC, Barclays, and Lloyds Banking Group have agreed to review their guidance on EWS1 forms in light of the government’s advice. We therefore hope that there will soon be clarity on the lender’s response to this advice and their requirements for EWS1 forms.
For Swan, the safety of our residents is paramount, and will work with our expert advisors to review the report and ensure that our approach takes full understanding of this government advice. We will continue to keep all residents updated as the situation develops.
How does the recent Government announcement affect the RICS Guidance?
The RICS response to the recent announcement is as follows:
“In light of the announcement from Government, RICS will work with all stakeholders (fire safety bodies, lenders, insurers, valuers, leaseholders and others), to consider the impact on our guidance to valuers. If amendments are needed to RICS guidance they would be developed through a consultative process and decided on by the independently led RICS Standards and Regulation Board which is responsible for ensuring our regulation is undertaken in the public interest.
In the meantime, our existing guidance remains in place and RICS valuers should continue to fulfil their professional obligations to advise lenders and purchasers, accurately on a property’s market value.”
Does each apartment have to get an individual EWS1 form for selling, buying or remortgaging?
No. Each EWS1 form is valid for an entire block or building. It is valid for five years.
Can the buyer or seller initiate the EWS process if the building owner has not?
The EWS process is for the building owner to undertake. Both buyers and sellers should be in contact with the building owner to request this takes place as quickly as possible where applicable. Please find the link to the RICS website for more information; https://www.rics.org/uk/news-insight/latest-news/fire-safety/cladding-qa/
How can I get a copy of the EWS1 form for my block?
A copy of the form is available to leaseholders for the block that they live in upon request, please email firstname.lastname@example.org to request a copy.
Why can’t you provide a copy of the full Report?
The Tri-Fire Report was prepared in contemplation of litigation, with a view to bringing a claim against those responsible for the construction of the block. This report is now being used by our solicitors for this purpose. Advice given to us by our solicitors is that any documents that may be used in litigation are legally privileged and should not be shared. Therefore, we cannot disclose the Tri-Fire Report, or any advice received from our solicitors in respect of the same. We have however summarised the findings of the report and this is available to residents of the block.
Is Tri Fire a reputable company and do they have the required qualifications?
Swan has undertaken due diligence to ensure that Tri Fire staff and EWS1 certificates issued by them meet the requirements of the RICS EWS1 guidance.
Will there be any costs charged to leaseholders?
It may be up to 12 months from the start of the process on your block before we know final costs for remediation works. At this stage we cannot guarantee that there will not be any costs recharged to leaseholders. However, we are doing all we can to recover costs from contractors and government funding. Any costs that might be charged will be done in accordance with the covenants of your lease and the Section 20 consultation process.
Will Swan make a claim for Government Funding?
There is a great deal of uncertainty in relation to the Government non-ACM cladding funding. Some customers have expressed concerns that Swan has ‘missed out’ on applying for the funding. To clarify:
- there is currently a £1.5bn fund for non-ACM cladding available.
- this existing fund has eligibility criteria that include the requirement for cladding remediation works to have started on site by September 2021.
- Swan is not able to meet this-criteria and therefore applications for the fund are unlikely to be successful.
- earlier this year, the Secretary of State for Housing Robert Jenrick, announced a further £3.5bn fund for cladding remediation.
- Swan has been liaising with our funding partners at the Greater London Authority (GLA) and Ministry for Housing, Communities and Local Government (MHCLG) to check the situation with this funding.
- the MHCLG and GLA have confirmed that the £3.5bn fund is a new and separate pot of money.
- the Government is still working out the details of the fund as the Building Safety Bill
- MHCLG will publish the prospectus for the funding, which will set out the criteria and timeframes for the funding.
- Swan has already informed the MHCLG that we will be applying for this funding when it is announced and have provided details of affected blocks.
The building safety fund currently only relates to external wall systems. What about balconies or any internal defects?
Current government funding relating to cladding does not cover remedial works to balconies or internal works.
Will Swan make a claim on the NHBC warranty?
Many of our customers have an NHBC Buildmark Choice policy relating to their property. Swan is generally unable to make a claim on this policy after 10 years. Where policies do still apply, NHBC has been notified of issues with blocks. Historically, NHBC do not accept claims for defects in the external wall construction (cladding issues) unless they also provided Building Control services. Swan is currently exploring the legal situation on each block with cladding issues to determine whether a claim can be made against the NHBC policy and will pursue all routes open to recover the costs for remedial works. This includes working with contractors, building insurers and the Governments’ Building Safety Fund. We have experience in these matters and are pursuing all claims/funding options for the cost of remediation.
Who signed off the building for NHBC purposes?
The NHBC have their own inspectors who sign off the building in relation to the NHBC Buildmark Insurance Policy. In relation to Building Regulations, these were signed off by either an approved inspector (such as the NHBC) or by the local authority building control department. All Swan buildings were signed off as compliant with Building Regulations at time of construction.
Does this outcome have implications on the building’s insurance?
Swan keep our insurance providers up to date on any fire safety related issues. It is possible that insurance premiums may rise and be passed on via the service charge.
Will this issue affect home content insurance? Do we need to disclose to our home content insurers?
Swan is unable to advise on contents policy matters and cannot advise whether this issue will affect your home contents insurance. You should read your insurance policy terms and act in accordance with these.
Will the cost for the waking watch be recharged to leaseholders?
Swan has made the decision not to recharge leaseholders for the cost of a waking watch.
Swan has been made aware that in some blocks, residents have received messages and letters to other residents stating that costs of works are known by Swan and even in some cases, stating figures. We understand this is alarming and confusing. Swan has not identified the extent of costs of remedial works at this stage (as explained above investigatory scoping work is still ongoing.) When this work is complete, and if it is deemed necessary to recharge leaseholders, any potential costs will be shared in writing as part of a Section 20 consultation.
Please send copies or images of any such misleading correspondence to email@example.com to assist us in identifying the source.
The technical bits
By way of background, the External Wall Fire Review (EWS1) process was launched by the banking trade bodies UK Finance and the Building Societies Association (BSA), and the Royal Institute of Chartered Surveyors (RICS). The EWS1 is a survey that assesses whether the external wall system of a property contains materials that are potentially dangerous, offering clarity to lenders and peace of mind for homeowners and buyers. The survey was initially recommended solely for blocks 18 metres or taller, but a month after its launch, the Government published revised fire safety guidance that potentially dangerous cladding should be removed from blocks of any height. This effectively meant that mortgage lenders expected the EWS1 on thousands of buildings between four and six storeys as well as those over 18m before agreeing to offer loans on them and has placed even more stress on the sector in its ability to deliver.
The impact of the changes and their application to a wide variety of buildings has meant that Swan has had to prioritise matters. We continue to work to deliver our process of inspection surveys and EWS1 forms for those blocks 18m and above. Swan will continue to inspect lower risk and lower rise buildings on a rolling programme of Fire Risk Assessments.
The extension of the EWS1 form for buildings below 18m in height has since been clarified by RICS to only apply where there are specific fire safety concerns. As such Swan will not be providing EWS1 forms for buildings under 18m in height unless there are specific fire safety concerns. If you have concerns, please raise them with us immediately by contacting firstname.lastname@example.org
To determine whether a building conforms to less than 18m in height this is measured to floor level of the top occupied storey (as per Diagram D6 of Approved Document B 2019 edition). The 18m threshold is established in the guidance to the Building Regulations and is the point at which additional fire safety provisions are provided for. Where Swan believes there are issues with external cladding systems, we have already taken additional fire safety provisions that follows government guidance.
Once again, we would like to apologise for any stress or upset that this situation is causing.
Please find more information on this topic from the National Housing Federation here.
And from the RICS here: https://www.rics.org/uk/news-insight/latest-news/fire-safety/cladding-qa/
We know that nationally, many people affected by this issue have reported it impacting their mental health. You can find out more about mental health on the NHS website here.