Yahoo Finance Trapped flat owners could be free to sell after cladding U-turn from ministers
The Government has U-turned on its cladding guidance in an effort to end the bottleneck of unsellable flats in medium-rise blocks.
It changed its rules on "external wall safety assessments" and said blocks under 18m high no longer need EWS1 forms and that mortgage lenders should not request them.
It added that banks should ignore past assessments that had valued homes at zero, unless they were in more dangerous high-rise buildings.
A new report ruled that there was no systemic risk of fire in blocks of flats under 18m high and therefore no remedial works should be required – even if they had previously failed the EWS1 checks.
Guidance set out by ministers in January 2020 had extended fire safety requirements – meaning they had to pass an EWS1 test – to all building. This sent lenders into a tailspin and trapped millions of homeowners in unmortgageable, and therefore unsellable, homes. It affected virtually all blocks of flats – no matter their height and whether or not there was any cladding.
This will now be withdrawn in a move that could affect tens of thousands of buildings, and hundreds of thousands of trapped homeowners.
Major lenders, including HSBC, Barclays, Lloyds Banking Group, which also owns Halifax, have agreed to review their EWS1 form requirements before properties can be mortgageable.
Housing secretary Robert Jenrick said: “The presumption [from banks] should be that these homes can be bought and sold as normal.”
A spokesman for Lloyds added: “We expect the government’s action will help further unlock the housing market.”
However, the Government will require the support of the Royal Institution of Chartered Surveyors, a trade body, which created the forms and carries out valuations for lenders.
A Rics spokesman said its guidance on valuing blocks of flats, published in March, was based on fire safety guidance at the time. It will now work with fire safety bodies, lenders, insurers and valuers to consider the impact of U-turn.
However, he did not confirm that it would change its stance and said that its existing guidance remained in place for now.
A spokesman for lender HSBC said: “We look forward to these changes being reflected in valuations from our Rics qualified partners.”
The report stated that fire risks should be managed wherever possible with measures such as fire alarms and sprinklers, and that the vast majority of medium and low rise buildings should not require expensive remediation. Mark Hardingham, of the National Fire Chiefs Council, a professional body, described the previous guidance as "an overly risk-averse approach in many buildings below 18m".
The number of fires in homes in England has been in steady decline, hitting an all-time low in 2020. Only 9pc of fires last year were in blocks with four or more storeys.
Works will still be required for buildings in blocks more than 18m high but this will be covered by the Government’s £5.1bn Building Safety Fund.
Mr Jenrick said: “Leaseholders cannot remain stuck in homes they cannot sell because of excessive industry caution, nor should they feel that they are living in homes that are unsafe, when the evidence demonstrates otherwise.”
He added: “I urge the rest of the market to show leadership and endorse this proportionate, evidence based, safety approach.”
The move was "cautiously" welcomed by End Our Cladding Scandal, a campaign group.
Buildings will still require fire risk assessments, but new guidance for the assessment of risks for external wall systems will be published. Under the new terms, remediation of these medium-rise buildings should now only be required in exceptional cases.
For buildings under 18m that still require remediation, the Government will provide low-cost loans capped at £50 per month per leaseholder.
Dame Judith Hackitt said the move was critical to help affected leaseholders. “What’s needed now is for the remaining bodies and lenders to get onboard.”
The move has been backed by the National Fire Chiefs Council and the Institution of Fire Engineers. Steve Hamm, of the Institution of Fire Engineers, a trade body, said: “This should enable a move away from the often risk-averse and overly cautious approach that has been seen in many cases.”
