In March, the Royal Institution of Chartered Surveyors (RICS) issued new guidance that was supposed to help up to half a million leaseholders sell or remortgage their flats. The guidance was introduced to enable surveyors to establish if extra fire safety checks were needed for tower blocks.
Unfortunately, an investigation conducted by the BBC Money Box has found that the guidance is still being ignored by many lenders. Consequently, many leaseholders are still finding themselves in positions where they are unable to sell or remortgage their flats, despite there being no specific safety issues of concern.
In the wake of the Grenfell Tower tragedy that resulted in 72 deaths, the RICS introduced the Exterior Wall System or EWS1. The purpose of this form is to offer formal assurance to sellers, buyers, and lenders that a flat is safe to sell, buy, or lend against. Vertically stacked balconies, flammable cladding, and other potential fire risks are assessed in order for the surveyor to reach a decision on the property’s safety.
But even where a flat does not need an EWS1 form in full accordance with RICS guidance, some lenders are declining applicants for not having one.
Trapped by bureaucracy
BBC Money Box interviewed leaseholder Jie Shen, who said that his retirement plans are now in jeopardy due to his inability to sell his flat.
Despite RICS guidance clearly indicating that his flat does not need an EWS1 form, prospective buyers interested in his property have now been declined by three separate mortgage providers on this basis.
“I feel like I’m trapped in this situation. I can’t move on with my life; I’m just locked into this, and I don’t know how to resolve it,” he said.
“I think the mortgage lenders should follow the advice from RICS and shouldn’t insist on an EWS1 form [for a building] that does not contain flammable cladding.”
“I just don’t understand why the mortgage provider insists on this—it’s just bureaucracy.”
Jie also commented on the fact that an EWS1 form is not something he is personally authorised to do, as responsibility lies with the freehold owner of the building.
Government intervention is required
In response, MP Clive Betts has written to the government to ask why a complete disregard for the guidance issued is being tolerated on a widespread level.
Mr. Betts penned his letter to the Secretary of State for Housing, Robert Jenrick, demanding information in two key areas:
- The ways in which the government is supporting the implementation of the new guidance from RICS.
- The actions that the government plans to take in the event that mortgage lenders continue to insist that EWS1 forms are obtained for buildings that do not meet RICS criteria.
“The system was set up with the lending industry and the surveying industry to work together to give reassurance to lenders. That is its whole purpose,” Mr Betts said in an interview with BBC Money Box.
“So if it isn’t giving reassurance to lenders to lend on buildings that the system says don’t need a certificate… then the system is a complete failure, and it needs taking up with both RICS and the lenders, so it doesn’t leave people stranded in homes that they can’t sell and can’t remortgage.”