EWS1 on under 18m high buildings … is still an utter mess

By Martin Boyd

On July 21 Communities Secretary Robert Jenrick boldly announced a complete reversal on something over which government has very limited control: the need or not for blocks of flats under 18 meters to have an EWS (external wall survey).

In a formal ministerial statement, citing supposedly independent expert advice, he declared that “there is no need for surveyors or lenders to request EWS1 forms for buildings below 18m”.

Proportionality in building safety

The following Written Ministerial Statement was made by Rt Hon Robert Jenrick MP, Secretary of State for Housing, Communities and Local Government on Wednesday 21 July 2021 in response to the Independent Expert Statement on building safety in medium and lower rise blocks of flats.

It has taken less than 10 days for the sector to reject the government’s position as reported in a series of articles:

Bid to solve UK building cladding issues hits stumbling block

UK politics & policy updates Sign up to myFT Daily Digest to be the first to know about UK politics & policy news. A deal between some of the leading high street banks and the UK government to resolve the cladding crisis has hit a roadblock just a week after being unveiled, sowing uncertainty among mortgage lenders and hundreds of thousands of leaseholders trapped in flats they cannot sell.

Buildings with an EWS1 form still need remediation despite new government advice, says RICS

Inside Housing, news, analysis, and comment about the social housing sector in the UK.

BBC Newnight:

Government’s cladding crisis solution slammed as ‘Groundhog Day’ by Labour

There will be no material change for leaseholders until the Royal Institution of Chartered Surveyors, a trade body, changes its advice for valuers. But it has said it cannot do this until the Government formally alters its fire safety advice. Ms Powell said: “This new statement feels a lot like Groundhog Day, with positive changes always failing to materialise.”

Today shadow secretary of State Lucy Powell refers to the issue as ground hog day in an article in the Telegraph

Government’s cladding crisis solution slammed as ‘Groundhog Day’ by Labour

There will be no material change for leaseholders until the Royal Institution of Chartered Surveyors, a trade body, changes its advice for valuers. But it has said it cannot do this until the Government formally alters its fire safety advice. Ms Powell said: “This new statement feels a lot like Groundhog Day, with positive changes always failing to materialise.”

A number of lenders have declined to accept the minister’s view that EWS1 is not needed on all under 18-meter buildings before they lend their money to purchasers of flats in these blocks. RICS has also said that its position will not change so long as the government advice says building owners must check a building’s whatever its height.

We seem destined for another period of uncertainty in the re-sale market of modern flats.

The key problem with Mr Jenrick’s position is that EWS is not a government system. The “External Wall System” survey came about because the government absented itself from the assurance that buildings were all supposedly built to within building regulation standards.

After Grenfell, the government’s “independent” experts deemed that all building owners for blocks over 18 meters were liable for checking the safety of their blocks without providing any guidelines on how this should be done.

The government then “observed”, while RICS was left to design a system for its members to survey the outside of apartment buildings for valuation purposes so that the lenders could continue to provide mortgages.

In the first bit of tautological gymnastics, these surveys were not deemed safety reports, but valuation reports: looking at the issues that might give rise to safety concerns.

As the results came in an appalling picture emerged of the building quality of blocks of flats in the United Kingdom. LKP discovered in February 2019 that 90% of blocks were reporting an EWS failure of the worst kind. Furthermore, so few staff were qualified to carry out these surveys that a backlog quickly developed.

RICS even changed its mind about who was qualified to carry out surveys on riskier buildings: only those with a relevant fire engineers’ certificate were deemed qualified to sign some of the forms.

LKP survey of EWS1 shows that 90% of cladding sites DO need remediation

In January 2020 the government’s independent building safety experts threw everything into chaos again when they updated their consolidated advice and suddenly announced that buildings of any height needed to be checked for safety.

Suddenly, EWS was required on buildings under 18 meters and in some cases, surveyors even started suggesting they might be needed for individual houses. The government tried to make a deal with the lenders that they would not ask for EWS reports on buildings with no evidence of cladding, but that failed to work.

On Saturday 21 November 2020 the government published this statement, which was instantly rejected by lenders:

Government steps in to help homeowners caught up in ‘EWS1’ process

Agreement that buildings without cladding not subject to EWS1 Nearly 450,000 homeowners set to benefit Government funding to train 2,000 more building assessors to speed up valuations Government working with industry to ensure professional indemnity insurance is available for assessors Owners of flats in buildings without cladding will no longer need an EWS1 form to sell or re-mortgage their property – thanks to an agreement reached today (21 November 2020) between the government and the Royal Institution of Chartered Surveyors ( RICS), UK Finance and the Building Societies Association ( BSA).

The government is stuck. Having absented itself from determining the standard by which we measure safety – or, more precisely, the value as impacted by potential safety issues – it keeps trying to produce initiatives to control what the market has created as an alternative system via EWS. Each time the government fails, the market becomes more nervous.

Why does the government keep failing?

To fix any market failure requires several parties to agree how the market should work. The lenders will not lend unless they have some certainty that the asset they lend on will not suddenly face a huge change in value.

The surveyors and engineers have to feel things won’t suddenly change again in six month’s time, as they take on the liability of asserting whether a building needs remediation or not.

The insurers have to be certain that they know the risk of the building they are covering. While there is no evidence that risks have suddenly increased, insurers have now increased costs across thousands of sites which they now think may have a greater risk than they previously assumed.

The ‘independent ‘ experts  

Of the four experts that the government has chosen to review the position, two also sat on the independent expert panel that created the expert advice that said we needed to check buildings of all heights. It is perhaps worth reviewing some of the quotes from their expert report to see how they get from pointing in one direction to facing in diametrically the opposite direction.

They say:

Independent expert statement in building safety in medium and lower-rise blocks of flats

Dame Judith Hackitt, Chair of the Independent Review of Building Regulations and Fire Safety Sir Ken Knight, Chair of the Independent Expert Advisory Panel on building safety following the Grenfell Tower Fire Ron Dobson, former London Fire Commissioner Roy Wilsher, Advisor on fire reform, former Chief Fire Officer 1.

“For the past 4 years, government has had a programme of reform and remediation in place to address systemic issues that pose risks of multiple fire fatalities in high-rise residential buildings (those over 18m and typically more than six storeys in height) and to protect leasehold owners of flats from the costs of cladding remediation where it is necessary.”

They now somehow conclude that despite this “systemic” risk, two of the experts who say there is little risk in under 18-meter buildings were the same experts behind the now-notorious Advice Notice 14 (AN14) and were also the ones who advised in 2020 that buildings of any height needed to be checked. One was key to the team which has imposed waking watch – with no evidence of whether it was an effective methodology or not.

One of the other experts is also a specialist in fire-related matters.

The fourth expert is Dame Judith Hackitt, who may well be skilled in issues relating to safety and the plastics industry, but like the rest is not an expert in surveying or building management.

But as the government has repeatedly said EWS is not a safety survey, it is a valuation survey. None of the experts have any specialist knowledge in surveying or lending or insurance and none has any expertise at all in leasehold issues and how that impacts buildings. When previously asked about leasehold issues, one of these experts said that was not part of his interest – “I am only concerned with building safety” – while another pointed out that such issues were beyond his job description and pay grade.

It is perhaps also worth remembering that one of the experts was a also a director at the Building Research Establishment – a controversially privatised organisation – when it produced a report the year before Grenfell. It said:

“With the exception of one or two unfortunate but rare cases, there is currently no evidence from these investigations to suggest that the current recommendations, to limit vertical fire spread up the exterior of high-rise buildings, are failing in their purpose.”

The proportional approach

The statement by Mr Jenrick talks about this being part of a new proportionate, risk-based approach, and that is what the experts should always have applied.

But what is proposed does not provide that solution. We are still left with individual engineers and surveyors making their own decisions.

Yet again the experts have totally failed to understand that in the leasehold system there are no costs faced by the “building owner”, only costs faced by the leaseholder.

We still have a system where the “building owners” have every incentive to make a profit from carrying out works that may not be needed. They will employ a surveyor who will be paid a fee based on a percentage of that work under a managing agent who also gets a fee based on the size of the work, all of which are then passed to the leaseholder.

Pandora’s box

The term Pandora’s box is now regularly used. It was first used by LKP in the cladding scandal in November 2017 when we warned officials of the dangers of not resolving the cladding crisis quickly.

The experts assumed we would not be the best qualified to know this.

In the same way, the Hackitt inquiry totally ignored our advice that it needed to understand how the leasehold system had such a large impact on this issue.

In the same way, the fire experts ignored the arguments that waking watch was flawed.

In the same way, the experts ignored the idea that loans do not work to pay for the remediation and that lenders can not lend on buildings that are deemed to be compromised and cannot lend to those who do not have the earnings to fund that extra borrowing

The solution

The experts have failed both pre and post-Grenfell. The government and even the Prime Minister have come forward with a number of initiatives all of which have failed.

The government has spent four years meeting different parts of the sector in separate silos and each has spent four years placing the blame at someone else’s door.

We still have half-formed plans for loan systems to leaseholders – most recently discredited at the APPG in July by Ted Baillieu, the former premier of Victoria in Australia.

At some point, the government will have to accept guaranteeing the PI cover of those carrying out the surveys.

A solution will only begin to emerge when all the impacted groups sit in a room together to find a solution. It will only emerge when we have a proper proportionate approach, which the sector has argued for from the outset but which the experts said was wrong.

The warning

At the moment, many aspects of the Building Safety Bill are being called a total disaster by many in private meetings.

The fact the Bill photocopies sections of leasehold law will cause huge problems in the future. Unless we find a solution soon the market for flats will damage the economy.

The Times and the Daily Mail reported our work on the data that shows flat sales are now down by as much as 50%. At the moment it will take years to recover, and every time ministers announce a solution that fails, the market becomes more fragile.

With the PAS 9980 and BSB costs, many exiting buildings seem likley to face some very high costs with no certainty of a consistent approach.