The Royal Institution of Chartered Surveyors (RICS) is proposing a major overhaul of the guidance for external wall survey (EWS1) forms that would potentially see vast numbers of buildings taken out of scope.
The changes could mean an end to months or even years of distress and stagnation for potentially tens of thousands of flat owners who have been unable to sell or remortgage their properties since the scale of building defects similar to those that caused the Grenfell disaster had been realised.
The guidance is aimed at valuers carrying out mortgage valuations on residential properties with cladding to provide consistency on whether they should request an EWS1 form before proceeding, the body said.
It proposes excluding all buildings of four storeys or fewer without aluminium composite material (ACM) or metal composite material (MCM) from requiring the EWS1 form assessment.
Buildings of five or six storeys in height will not require an EWS1 providing no more than a quarter of the surface area is clad, with none of it being ACM or MCM, and there are restrictions on balcony layout.
For buildings above six storeys, where there is no cladding or curtain wall glazing on the building and balcony restrictions are met, no EWS1 survey will be required.
“We are mindful that these changes will significantly impact home buyers and sellers in affected properties,” RICS said.
“When developing this guidance, we have tried to balance the interests of buyers and lenders with the needs of ensuring an effective home buying and selling process.
“We have also been mindful of the need to ensure EWS1 forms are targeted at the most at-risk buildings to speed up the process of identifying and remediating unsafe homes.”
There is no official estimate of how many buildings have been drawn into the scope of EWS1 since the government issued its extended guidance paper in January last year.
However, the government note which prompted the RICS consultation suggested it would clear the way for up to 450,000 flat owners to sell, move or remortgage their homes.
A report by Capital Economics published earlier this week suggested as many as one million flats could be affected by the cladding.
The guidance targets buildings in which it is less likely that expensive remediation work affecting value will be required.
This, RICS said, would allow valuers to make a reasonable assumption about valuing properties in these buildings without requesting an EWS1 form from building owners.
The consultation is open from 8 to 25 January with finalised guidance expected to be published in February.
“We will use the evidence and views we receive during the consultation to ensure that the criteria are robust and properly reflect current practice, as well as balancing the risks to lenders, buyers and sellers,” RICS added.
UK Finance and the Building Societies Association issued a joint statement on the consultation.
“Homeowners in flats and apartments should be able to have confidence that their property is safe to live in, and buyers should expect no less,” the trade bodies said.
“Today’s launch of the RICS consultation about valuer guidance relating to the EWS1 process is a welcome step forward in supporting a safe and smoothly functioning housing market.
“While it’s too early in this process to pre-judge the outcome of the consultation given the multiple stakeholders involved, lenders will be actively involved, positively contributing to the development of solutions for those affected.”
Joe Arnold, managing director of Arnold & Baldwin Chartered Surveyors, said: “The consultation is open to everyone and it’s so important that people contribute to the guidance to help arrive at a solution that truly tackles the issue.
“I’ve been very disappointed with government announcements so far, as they appear to pay lip service to the problem without presenting an effective solution.
“As always, the devil is in the detail, and that requires close collaboration and genuine consultation.
“Now is an opportunity to do just that and give the cladding issue the proper attention it deserves. It’s a tight deadline, so please take a look as soon as you can.”
RICS head of valuation standards Ben Elder noted that since the EWS1 form was introduced, government advice had changed and Covid-19 had seen lending criteria reviewed.
“EWS1 was never intended to hold up the market, indeed without it, no one would be moving. However, this proposed guidance intends to help by providing valuers with clear criteria to help them decide on whether an EWS1 form may be required or not,” he said.
“There will clearly still be many cases where an EWS1 form is necessary, but the guidance and insight resulting from this consultation will enable us to continue to work with stakeholders, including government, to find solutions to help speed up the process for remediating these buildings.”
The guidance note is subject to final approval by RICS’s independent standards and regulation board, which is chaired by Dame Janet Paraskeva, following the consultation.
Dame Janet Paraskeva added that public confidence in the safety of buildings with external cladding systems was at an all-time low.
“Concern over safety and potential remediation costs presents a significant challenge for those advising potential purchasers and lenders,” she said.
“The purpose of the guidance is to create consistency, and to support best practice, in order to ensure that properties affected are properly identified and those unaffected by unsafe cladding are not unnecessarily impacted.”