Homeowners face sales falling through and zero valuations due to fire safety test delays

Homeowners have found themselves tied to unsellable and potentially unsafe flats due to delays over fire safety tests.

Which? continues to be contacted by more than 120 readers who are facing difficulties buying, selling or remortgaging flats because of lenders asking for a safety certificate that they’re finding impossible to acquire.

Here, we explain a series of events which has seen properties given zero valuations and outline the moves the federal government is taking to help some of the people affected.

High rise flats and combustible cladding

In the wake from the Grenfell tragedy in 2021, the government identified hundreds of blocks of flats with cladding it said could have a and the higher chances of fireside. Consequently, it revised its rules on which materials developers could use when building high-rise blocks more than 18 metres tall in the future.

But with many existing blocks potentially constructed with combustible cladding or unknown materials, buyers as well as their mortgage brokers faced difficulties confirming if they were safe.

In December 2021, the External Wall Fire Review (EWS1) process premiered through the banking trade bodies UK Finance and also the Building Societies Association (BSA), and also the Royal Institute of Chartered Surveyors (RICS).

The EWS1 is really a survey that assesses whether a house contains materials that are potentially dangerous, offering clarity to lenders and reassurance for homeowners and buyers.

The survey was recommended solely for blocks 18 metres or taller, but just a month after its launch, the government published revised fire safety guidance, which instructed that very damaging cladding should be removed from blocks of any height.

This effectively meant that mortgage lenders could now demand the EWS1 on thousands of buildings under 18 metres before receiving offer loans in it.

A lack of clarity

In February, Which? spoke to a member who had enquired about a mortgage on a flat with two UK's biggest lenders.

One told him that it required an EWS1, however the other said it did not.

At the time, the BSA told us the choice over whether or not to request EWS1 lay with individual lenders, while RICS said that as the form isn't mandatory, it was expecting all lenders to consider it in the future.

In the next months, this confusion continues, with a few lenders dismissing all blocks without EWS1 certificates, and others still lending on those below 18 metres tall.

EWS1 and zero valuations

Which? readers have contacted us by the dozen about the EWS1 process.

Most are sellers who only became aware of laptop computer when a buyer informed them their mortgage have been rejected.

For those whose lenders have demanded the EWS1, the content has been clear – the property is essentially worthless for mortgage purposes without it.

This means that before the block continues to be tested, owners have little prospect of promoting their flats and could struggle to remortgage, potentially resulting in much higher repayments.

How to get an EWS1

Getting the EWS1 test can be challenging. The survey ought to be requested by the building’s freeholder, however, many flat owners told Which? they found their freeholder either uncontactable or unhelpful.

Freeholders have commonly cited three good reasons for rejecting requests for that survey: the EWS1 is only a recommendation rather than a legal requirement, your building is under 18 metres tall, or it has no cladding to check.

Homeowners that do make some headway with their freeholders have been quoted anything from 1 . 5 years to some decade to have the survey done, based on whether their block is considered to be of the high priority.

Case study: ‘I can't sell, and my freeholder won't do anything whatsoever about it’

Which? reader Thomas (surname withheld) is trying to sell his flat in East London to maneuver nearer to his elderly parents.

He has seen one potential buyer lose their mortgage offer because of his block lacking an EWS1, and his freeholder – a large housing association – has given no indication of methods long it might take to achieve the survey.

Thomas has struggled to make contact with his freeholder. He states he has been stonewalled at each turn, and only received an answer after contacting his MP.

He says: 'The freeholder told me my block is recognized as low priority as it did its very own fire safety assessment a year ago, but mortgage brokers are just interested in the EWS1.'

Thomas's freeholder told him it owns a sizable stock of housing and the block is well down the priority list. It also cited deficiencies in qualified fire safety engineers like a reason for the delay.

Thomas says if he wants to move anytime soon, his only option may be to find a cash buyer for the flat.

He told Which?: 'This situation has caused great stress for me and my parents. Basically have to sell to a cash buyer, I stand to lose around lb150,000 when compared to offer I'd previously accepted.'

Footing the bill

It is ultimately down to the freeholder to guarantee the building is safe, but that doesn’t necessarily mean they’ll purchase the EWS1.

Some flat owners have told Which? that clauses within their lease mean that they have to purchase the exam themselves.

And an unsuccessful test could be of great consequence. Not only does it mean they are potentially residing in a property that carries a greater fire risk, it also means remediation work must be done before the home can be sold.

Remediation may take years, and also the terms of the lease usually imply that the cost will fall on the homeowner rather than the freeholder. It has seen leaseholders in some blocks face quotes of hundreds of thousands of pounds to have work done – figures that are simply unrealistic for that vast majority of homeowners.

Case study: ‘Our lease says we should purchase the survey’

Which? members Sarah and Daniel (not their real names) saw their buyer's mortgage rejected after the lender's valuer demanded an EWS1.

Upon inquiring concerning the survey, they found that a ‘catch-all’ clause in their lease stated the flat owners, rather than the freeholder, were responsible for paying such costs.

And to have the test done, they first required to get all the other leaseholders in the block aboard.

They told Which?: 'Some owners in our block who are looking to sell or remortgage also wanted to have the survey, but others were worried about the expense, which started at around lb6,000 but tend to potentially quadruple when the initial survey found major issues.'

In accessory for the price of conducting the EWS1, fellow leaseholders objected on the basis the block is below 18 metres tall, and therefore theoretically it sits outside the original remit of the EWS1. They felt the freeholder should be responsible for paying.

Sarah and Daniel now finish up in a cycle of not being able to sell the property, but additionally the inability to possess the test done.

They said: 'We desired to move to buy a freehold property beyond London, however we’re stuck. We've needed to inform our buyer that people can't pursue the EWS1 or proceed using the sale.'

Will the government purchase remediation works?

At this time, all sides reach an impasse over what happens if a block fails the exam.

Homeowners believe that it is unfair that they need to pay to create their blocks stick 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 each side want to the government to intervene.

So far, it's submit lb1.6bn in funding to exchange unsafe cladding, but this only covers properties of more than 18 metres tall, therefore it won't be available to a lot of those affected. Critics also have claimed that the sum is merely a drop in the ocean compared to what's actually required.

RICS told Which? it is with the government to intervene and identify which buildings below 18 metres are unsafe, and also to fund remediation so the cost doesn't fall towards the leaseholder.

What next for that EWS1?

In the lack of a recognised test, the EWS1 was created through the industry to make sure flats weren't constructed with combustible materials and give lenders the boldness to provide mortgages.

But the government's rule changes have meant that banks are now requesting surveys on blocks the EWS1 wasn't originally created for, creating confusion for buyers and sellers.

RICS told us the EWS1 itself doesn’t block mortgages, rather it really identifies whether buildings have combustible cladding or walls made of unknown materials.

It believes that without the EWS1, even fewer mortgages could be processed as valuers wouldn’t have the ability to value properties constructed with potentially dangerous or unknown materials.

Ultimately, it says that while all parties are constantly trying to improve the speed of the process, safety is the most crucial priority.

MPs recommend changes to fireplace safety tests

The HCLG Select Committee (a cross-party group of MPs) says that while EWS1 is well-intentioned, it hasn't worked in practice, in part as a result of insufficient fire safety inspectors.

It says there are still 2,000 residential buildings with potentially dangerous cladding, and has required the government to invest in fixing affected buildings by the end of 2021.

In the interim, it says EWS1 might be reformed in a number of ways: by relaxing the guidelines on who can undertake the surveys, clarifying which buildings need to be tested and offering greater assistance with which blocks should be prioritised.

Affected homeowners are looking hopefully towards the government's upcoming Building Safety Bill, but it remains to be seen whether any tangible assistance will be offered.

In the meantime, homeowners living in affected blocks face safety concerns, zero valuations and also the prospect of delays stretching for many years.