Should I buy a flat in London without an EWS1 form/certificate?

Gregorx91

Hi guys,

I've been trying to purchase a flat in London and have been denied a mortgage from Halifax as they mentioned the reason for this was because the flat requires an EWS1 form/certificate.

To help the situation, the management company of the building have provided the following statement:

In March 2021, the Royal Institute of Chartered Surveyors (RICS) issued new guidance to clarify when an EWS1 form may be required, which comes into effect from 5 th April 2021.

In summary, this is intended to help clarify the existing advice for valuers when undertaking valuations for secured lending purposes (e.g. mortgages) on residential blocks of flats in the UK. This new guidance states that for buildings of four storey’s or fewer, an EWS1 form should only be required where there are Aluminium Composite Material (ACM), Metal Composite Material (MCM) or High-Pressure Laminate (HPL) panels on the building.

We are pleased to let you know that following an assessment of apartments at (Flat to purchase), in line with the criteria set out in this new guidance, these materials are not present in your external wall system. This means that an EWS1 form should not be required for secured lending on homes in this building.

Is the above sufficient evidence to try another lender? I'm really lost as to what to do as I don't want to start another application and incur additional fees for another lender to then say the same thing.

What would you do in this situation? Would you still proceed with purchasing the flat or steer well clear? I don't want to be stuck with a flat with a £0 valuation in future which I cannot sell or remortgage

Side notes: The building consists of 3 floors (ground, level 1 and level 2) so assuming it is less than 18m tall.

We've also negotiated the sellers down massively on this property, probably in large part due to the cladding situation who probably want nothing to do with it anymore.

Interested to hear your thoughts!

Thanks,

G

Owleyes00

Friend of mine has been in the exact same situation. Mainstream lenders wouldn’t lend because of the lack of ESW1 despite not meeting the criteria to require one as you have set out in your OP. He has found a specialist broker who has sorted a mortgage and is completing tomorrow.

If the question is whether or not you CAN do this then the answer is very likely to be yes.

If the question is whether or not you SHOULD do this then that is another issue. Nobody knows how legislation around buying and selling flats is going to change in the next few years and nobody can say whether a future potential buyer would have the same difficulty buying the flat as you have.

How long you are planning to live there, how much money you can afford to lose are the key considerations. Only you can decide…

GDB2222

Owleyes00 said:

Friend of mine has been in the exact same situation. Mainstream lenders wouldn’t lend because of the lack of ESW1 despite not meeting the criteria to require one as you have set out in your OP. He has found a specialist broker who has sorted a mortgage and is completing tomorrow.

If the question is whether or not you CAN do this then the answer is very likely to be yes.

If the question is whether or not you SHOULD do this then that is another issue. Nobody knows how legislation around buying and selling flats is going to change in the next few years and nobody can say whether a future potential buyer would have the same difficulty buying the flat as you have.

How long you are planning to live there, how much money you can afford to lose are the key considerations. Only you can decide…

I agree, but key to this is whether there's a decent discount on the flat. If it's being sold now at a rock bottom bargain price, there's a good chance that the OP can sell it later at a rock bottom bargain price. And, in the meantime, his interest payments are lower. 

NameUnavailable

Gregorx91 said:

Side notes: The building consists of 3 floors (ground, level 1 and level 2) so assuming it is less than 18m tall.

We've also negotiated the sellers down massively on this property, probably in large part due to the cladding situation who probably want nothing to do with it anymore.

Interested to hear your thoughts!

Thanks,

G

Just to clarify, how did you negotiate a big reduction in price for 'cladding' if the building doesn't have any cladding?

I'm in the process of buying a 60's built flat, brick facades, no EWS1 required. I don't know if Halifax are just insisting on it for any flat or if they've not looked at the details of your purchase?

Have you queried it with anyone at Halifax? Do you use a mortgage broker?

Lunchbox

Two things to consider; 1. Only buy at a very substantial discount as you’ll find this flat very difficult to sell on in the future if the situation with lenders hasn’t changed. You are unlikely to find a lender on this one as the situation stands.

2. Look at the fire safety/risk assessments which are separate to EWS1. Regardless of the height, they may have had a survey done which is likely (unless it’s a very new build) to have found issues with fire breaks, fire compartmentation, fire stopping, smoke spread etc. which may require very costly remedial works over the next few years (e.g. in some blocks front doors need replacing at a cost of £4,000 for each property). This will also substantially impact the value and saleability.

Gregorx91

NameUnavailable said:

Gregorx91 said:

Side notes: The building consists of 3 floors (ground, level 1 and level 2) so assuming it is less than 18m tall.

We've also negotiated the sellers down massively on this property, probably in large part due to the cladding situation who probably want nothing to do with it anymore.

Interested to hear your thoughts!

Thanks,

G

Just to clarify, how did you negotiate a big reduction in price for 'cladding' if the building doesn't have any cladding?

I'm in the process of buying a 60's built flat, brick facades, no EWS1 required. I don't know if Halifax are just insisting on it for any flat or if they've not looked at the details of your purchase?

Have you queried it with anyone at Halifax? Do you use a mortgage broker?

So the background of this flat is that the sellers first made it available on the market back in September 2020 priced at £400k.

They then staggered the price down from £375k to £350k. We've since negotiated them down to £338k as Halifax reduced our affordability (down from £298k to £285k) and we didn't have the shortfall in savings to cover the gap hence asking the sellers to knock off the difference.

Halifax have insisted on it, even though the current guidance states that buildings 18m or lower don't require an EWS1 form. I read online that most lenders are not willing to meet the up-to-date criteria until the government has fully revoked the consolidation advice note (CAN) and RICS have provided greater guidance on EWS1 requirements.

We've been using a specialist mortgage broker throughout the entire process.

Gregorx91

Lunchbox said:

Two things to consider; 1. Only buy at a very substantial discount as you’ll find this flat very difficult to sell on in the future if the situation with lenders hasn’t changed. You are unlikely to find a lender on this one as the situation stands.

2. Look at the fire safety/risk assessments which are separate to EWS1. Regardless of the height, they may have had a survey done which is likely (unless it’s a very new build) to have found issues with fire breaks, fire compartmentation, fire stopping, smoke spread etc. which may require very costly remedial works over the next few years (e.g. in some blocks front doors need replacing at a cost of £4,000 for each property). This will also substantially impact the value and saleability.

So I've answered #1 in a separate comment:

The background of this flat is that the sellers first made it available on the market back in September 2020 priced at £400k.

They then staggered the price down from £375k to £350k. We've since negotiated them down to £338k as Halifax reduced our affordability (down from £298k to £285k) and we didn't have the shortfall in savings to cover the gap hence asking the sellers to knock off the difference. Is this discount significant enough?

#2 - We've reviewed the fire risk assessment report that was last carried out in April 2017 (due another one next year). The conclusion of that said the risk to life at the building was 'tolerable':

"No major additional controls required. However they may be a need for consideration of improvements that involve minor or limited cost. All hazards, comments and deficiencies in this report should be addressed by implementing the recommendations in the Fire Risk Assessment."

It also said that the building has includes traditional brick and block external cavity wall. However, there is some cladding located towards the roof and 2 flats are located to the side of building have timber-looking balconies.

NameUnavailable

I would speak to your broker about finding another lender.

I wondered if EWS1 would be an issue on the flat I'm trying to buy - mortgage applied with TSB and no mention of needing EWS1.

Leesabee1

I would try and find another lender if you really want the flat but be aware that the regulations may change in the future and as your building is under the 18 metre cut off, it would not qualify for any government funding. 

They only way to fully resolve the issue and future proof it is with an EWS1 as the timber balconies will definitely not meet today’s building regs. This block would probably receive a B1 rating in its current state. But to get there you would need a facade survey followed by a fire engineers assessment, all of which are not cheap. 

NameUnavailable

Gregorx91 said:

#2 - We've reviewed the fire risk assessment report that was last carried out in April 2017 (due another one next year). The conclusion of that said the risk to life at the building was 'tolerable':

"No major additional controls required. However they may be a need for consideration of improvements that involve minor or limited cost. All hazards, comments and deficiencies in this report should be addressed by implementing the recommendations in the Fire Risk Assessment."

It also said that the building has includes traditional brick and block external cavity wall. However, there is some cladding located towards the roof and 2 flats are located to the side of building have timber-looking balconies.

So some cladding and balconies then - this is probably why Halifax want the EWS1.

Read this thread about looming changes to fire regs https://forums.moneysavingexpert.com/discussion/6296609/armageddon-for-flat-owners-pas-9980-even-worse-than-ews1-fiasco/p1

IamWood

I am now facing a similar issue. Can OP update your resolution, please?

Did you simply walk away or already lived there happily?

Thanks