EWS1 forms

Journalist: Anna Sagar, Mortgage Solutions / Specialist Lending Solutions

ended 20. July 2022

Interested to speak to mortgage brokers about their experience with EWS1 forms. 

  1. Have you had any cases where they have been deemed necessary? Why has that been the case? 
  2. What is the process like? Has it improved since they were introduced? 
  3. Are they requested on solely high-rise buildings or is it more broad?
  4. How does it impact the borrower and what would your advice to a borrower be in this situation?

 

8 responses from the Newspage community

EWS1's and the cladding issue as a whole is redefining "omnishambles" on a daily basis. The Government make big announcements, the public think it's being resolved (or even has been listening to some of the rhetoric) and yet RICS and lenders have a completely different view - and not surprisingly, as it's their heads on the chopping block if it all goes wrong, not the politician who will have "misspoke". Whilst ministers, lenders, RICS and developers thrash it out and try to pass the buck to each other to pick up the tab, it is the members of the public who own these properties that suffer - unable to move, unable to remortgage and potentially looking at massive bills from their management company for EWS1 reports, or for works to make the property safe, which will take years. A great example of the confusion around this is one case I had on a building under 18 metres that the RICS member valuing the property for the lender said needed an EWS1 report. The building did not have one, because the management company didn't think they needed one, so weren't prepared to pay for one - checkmate. No one can now buy, sell, or remortgage until either the management company relent and get the EWS1, a lender comes along that ignores the guidance from RICS, or RICS change their stance (which will require the Government to be forthcoming with something more tangible than they have to date). The only potential winners could be those that purchased on Help-To-Buy with an Equity Loan. As the property will be worth next to nothing (compared to what they originally paid), it means their debt to the HTB scheme is also tiny, so if they can get the money to repay it they are in a great position. However, from anecdotal evidence, it would seem that they are being blocked (or Government agencies are trying to block them) from doing this. This is yet another aspect of the cladding saga, I'm sure there will be more, as the issues are so far reaching.
Lenders and EWS1 forms go together about as well as Boris and the truth. It's a nightmare trying to arrange a mortgage on a block with cladding and as such I don't get involved
For lenders a EWS1 form is a simple request however for a buyer it can be a nightmare, if a building has cladding chances are a lender will want one, to actually get one can be much harder, Many lenders are insisting that an EWS1 is completed on ALL buildings – even those below 18 metres in height. An ESW1 is not needed for buildings less than 18m high. If a building is under 18m then by law it doesnt require one however if a lender requests it then chances are you wont get a mortgage without, as the EWS1 is provided by the buildings management to get them to fork out for one is a whole new challenge
A fair few lenders will require the EWS1 form if it has more then 4 floors which if it's not already been done can be an absolute pain in the proverbial as it can take ages to get but some management companies of flats who are actually awake at the wheel will have already had these done since the tragedy of grenfell.
One case, 4 storeys high, declined, area of cladding was smaller than my boxers. However, it was within spitting distance of Grenfell Tower. Coincidence, may be not!!
The EWS1 issue has been holding owners of flats hostage for longer than John Patrick McCarthy. We work with many Help to Buy flat owners and these properties are particularly affected by the EWS1 issue. Flat owners are literally trapped inside their properties. Unable to refinance, unable to sell, and crucially, unable to exit the Governments Help to Buy scheme. Without a compliant EWS1 form a surveyor will usually value a flat at zero. In theory this sounds great for Help to Buy'ers as the equity loan repayment should also be zero. However, Help to Buy will usually not accept the zero valuation. In year five those with Help to Buy start to pay interest on the loan. Interest which rises every year. So now their finances are being put under pressure because of a Government scheme designed to help them onto the property ladder which they cannot get out of!
This is still a major problem in the marketplace and its made more difficult by a lack of clarity on what will or wont be acceptable to each lender. Despite the fact that law now says an EWS1 is not mandatory for buildings under 18 meters, lenders will not confirm that an EWS1 is not required and will always hide behind the protection of the surveyors comments. This means that realistically any building block of any size could be subject to an EWS1 request but you wont get confirmation until you have got as far as the valuation being done and this could vary depending on who you apply to. There really needs to be some up front clarity on what buildings the report will be required on and what buildings do not currently have the report available so buyers can make informed decisions before commiting to mortgage applications.
Lenders are requesting an ESW1 form for any property that has more than 4 floors - this is despite the recent advisory from the Government that it's not mandatory. I had many clients promised by the selling agent when the offer is accepted that an ESW1 form is in place. Being rushed into applying for the mortgage due to the current demands but only to to find out a couple months down the line from the solicitor the ESW1 form has not been completed or invalid (B rating and below). One of my clients had 3 purchases fall through in London for this same reason and has given up owning a home and stayed living with her mother. Lenders are not flexible so it's a complete waste of time for the buyer unless they're buying the house for cash. They've wasted money on broker, survey, mortgage and legal fees! I've seen no improvement or anyone in the industry take ownership of this crisis and many homeowners are a prisoner is their home because they cannot sell it on without a valid ESW1 form - it's down to the freeholder to arrange this and many are not forthcoming. My advice would be to buy a freehold property unless the selling agent/buyer can present a ESW1 form upfront and pay for this to be checked by your conveyancer.