What Grenfell means for mortgages


On 14 June 2017, at 00:54 BST, a fire broke out in the 24-storey Grenfell Tower block of flats in North Kensington, West London.

72 died, including two victims who later died in hospital.
More than 70 others were injured and 223 people escaped.
Flammable cladding that covered the building caused the fire to spread very quickly.

The fire has highlighted safety issues with untold numbers of blocks of flats from the top to the bottom of the UK. It has highlighted years of poor building controls and focused the attention on the construction industry, where it has been essential to build properties as cheaply and quickly as possible.

As a result of this lenders became extremely concerned about lending on flats in tower blocks, even those that are classed as low rise, if the building has any form of cladding on it. This resulted in representatives from various UK finance bodies and chartered surveyors creating the EWS1 (External Wall Survey) form in December 2019.

Initially this survey was recommended for residential blocks at heights of 18 metres or more. With the freeholder’s permission, a survey takes place to ascertain if the block was built using combustible cladding or insulation. Following completion of the survey, the form is issued and this details if the building is deemed safe or in need of remedial work.

Many lenders now require sight of a completed EWS1 form before approving a mortgage for a purchase or even remortgage application. We are seeing lenders refusing to consider offering mortgages without sight of the form. The problem however is getting the freeholders/ managing agents to agree to carry out and pay for the surveys as they can be very expensive. Even if a survey is on the more affordable side, the process can take a long time to arrange, leaving homeowners and buyers stranded.

One issue in carrying out these surveys is the sheer lack of qualified surveyors. According to some sources there are only 291. This is simply not enough, when you consider there are roughly 2000 blocks of flats that still have Grenfell style cladding 3 years on.

In January 2020, the government issued further safety guidance which led lenders to demand the EWS1 form for practically all flats, even those with 3 floors for example, and where there is any indication of cladding or decorative timber. All flats are coming under more scrutiny.

In March 2020, the chancellor, Rishi Sunak announced a £1bn fund to remove cladding from unsafe buildings over 18 metres tall, but this just does not go far enough.  It will not cover all the work needed, nor the thousands of pounds many leaseholders are currently being charged for so-called waking watches.

So, if you are buying what does all this mean?

We suggest that you ask the agent if an EWS1 form is available, and if so to see a copy of it. Primarily you want to ensure that the flat is safe, but if there are works required you need to know the extent of those works, and more importantly the cost involved. Where a form has not been available, we have been advising clients to not proceed, in order to avoid the expenditure that comes with applying for a mortgage, such as valuation, broker and lender fees, only to the find that you cannot get the mortgage and as such have lost the money.

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