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Can I get a mortgage on a property with cladding?
Following the Grenfell Tower fire disaster of 2017, stricter measures were put in place surrounding fire safety and cladding in high-rise buildings.
The cladding of Grenfell Tower had been installed on the outside of the building to provide further insulation, however, materials used in its construction were tested and found to be highly combustible. Before the tragedy, the industry was generally relaxed about the use of combustible materials, with minimal intervention and enforcement.
The tragedy of Grenfell Tower not only resulted in tighter regulations surrounding cladding and fire safety, but it also had an impact with regard to mortgage lending, including the requirement for an EWS1 form. This form requires a professional survey of the property to determine the safety and suitability of the cladding, insulation and other materials used in its construction.
These regulations have meant that some leaseholders or freeholders of high rise buildings have become mortgage prisoners, where they are unable to sell or remortgage because their building has been classed as high risk.
Now, as new guidance published by the Royal Institution of Chartered Surveyors (RICS) allows the valuation of some at-risk properties, some lenders are beginning to relax their stance on this issue, meaning it is becoming easier for people to take out mortgages on properties with cladding.
What is an EWS1 form?
An EWS1 form is a document that is endorsed by RICS and is produced after an inspection by someone who is deemed to be competent in assessing the fire risks associated with external wall systems.
The report provides an assessment of individual external walls and will state whether or not the building has any areas where cladding is unsuitable. This document can be used to provide assurance to lenders that the building does not pose a fire risk.
The EWS1 form must be written by a qualified inspector as it is a formal document. The EWS1 form contains detailed information about how walls are constructed and where there are potential risks of fire spreading on the outside of buildings.
Some lenders will still require an EWS1 form before they will offer a mortgage on a property with cladding, while others are more relaxed. It is important to check with your lender as to their requirements before making any decisions.
When is an EWS1 survey required?
The regulations are stricter for buildings that are 18m or higher. The guidance states that if your building is 18m or more in height, then an EWS1 form must be completed by a qualified independent inspector before you can remortgage your property. However, some lenders still require the forms to be completed on buildings below 18m in height.
The guidelines are subject to change, but as it stands an EWS1 survey is required on properties that are:
- More than 6-storeys, have cladding, curtain wall glazing of balconies that are vertically stacked
- 5 to 6 storeys with a significant amount of cladding, ACM, MCM or HPL panels or have balconies that are vertically stacked.
- 4 storeys or less with ACM, MCM or HPL panels
- More than 18m in height (6 storeys) are of high risk or require specialist testing
What is a cladding mortgage prisoner?
A cladding mortgage prisoner is someone who is unable to remortgage or sell their property because of the external wall system. This can be caused by an inability to arrange a suitable mortgage due to the building’s cladding.
The measures taken in response to the Grenfell Tower tragedy mean that some leaseholders or freeholders of high-rise buildings have become unable to remortgage their properties, meaning they are trapped in their existing mortgages, regardless of whether they can find a better deal elsewhere.
It is important to note that it is not always the case that a building with cladding will be considered high-risk and some lenders are beginning to relax their stance on this issue, so it may be worth speaking to your lender about your options.
Do all mortgage lenders require EWS1 form?
No, not all mortgage lenders will ask for EWS1 forms to grant a mortgage, and it will depend on the risk appetite of the lender.
While the majority of lenders will still require the form to be completed before they consider your application, the landscape is continuing to change and the choice of lender may improve in the future.
We recommend that you engage an experienced mortgage broker who has worked with these requirements before. This will ensure that you are approaching the right mortgage lender with your application and improve your chances of approval.
Should you buy a house with cladding?
If you are looking to purchase a property with cladding, you should always engage an experienced surveyor to carry out a thorough report before making any decisions.
Note that the EWS1 form applies to the external wall systems only and does not represent a complete fire risk assessment of the property.
Will flat owners have to pay for fire safety remediation works?
There is an ongoing debate about who should pick up the bill of replacing any unsafe cladding.
The government has argued that the leaseholders should not cover the cost of replacing unsafe cladding, as they bought the properties in good faith that they were safe and legally conformed to standards set by regulators.
There have been cases, however, where it is leaseholders and not freeholders or developers who are being asked to cover significant costs of removing and replacing the cladding of the external walls.
The costs of making the cladding safe can run into hundreds of thousands of pounds, and leasehold agreements are not always clear about who should be picking up the cost.
The UK government has introduced the Building Safety Fund to fund the remediation of cladding on high-rise residential buildings over 18m tall. The fund opened for new applications on 28 July 2022 for eligible buildings without a funding solution in place.
The government-backed financing arrangement will go some way to cover fire safety repairs for buildings over 18m, which it argues represents the largest investment in improving the safety of these buildings in a generation.
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Do I need an EWS1 if my building doesn't have cladding?
In general, if you live in a building lower than 18m without cladding or a combustible timber balcony, an EWS1 form is not required.
How much does it cost for cladding remediation?
The cost of cladding removal or remedial works can be excessive.
The cost of cladding removal or remedial works can be excessive. Some leaseholders have reported receiving bills for having cladding replaced that are close to the price they paid for their property.
While there is an ongoing debate about who should pay, there is no doubt that high remediation costs are contributing to the cladding crisis.
Get help with your cladding mortgage
If you're considering switching mortgage lender or selling your property that may have potentially combustible materials, it is recommended that you get expert advice before you proceed.
Many lenders are cautious about the government guidance surrounding higher-risk buildings and high-rise blocks. Our expert advisors have helped people in all situations to find the right financing option for them, and we can help improve your chances of a positive mortgage offer by knowing the right lenders to approach.
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Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.