18 February, 2020
A new External Wall Fire Review process has been agreed by The Royal Institute of Chartered Surveyors (RICS), The Building Societies Association (BSA) and UK Finance in relation to the valuation of high-rise buildings (above 18 metres or six storeys).
The Government created a policy following the Grenfell fire which placed a ban on the use of combustible material on newly built properties and the removal of other potentially combustible materials from existing tall buildings. Since the policy was introduced, the market has faced significant difficulties by owners buying, selling and re-mortgaging the affected properties.
The new process will require an assessment to be made of the fire safety of external walls in high rise buildings that may contain combustible materials. A pro-forma EWS Form has been released which RICS advise "must only be completed by competent chartered professionals with suitable fire expertise."
Although the Building (Amendment) Regulations 2018 (S.I. 2018/1230) ("Amendment Regulations") was effective from 21 December 2018, they will not apply "where a building notice or an initial notice has been given to, or full plans deposited with, a local authority before 21 December 2018 and either the building work to which it relates: (a) has started before that day; or (b) is started within the period of two months beginning on that day." The new process should be used where it is not evident that the materials used in the external walls of the new building comply. As such, the process should be followed for both existing and new buildings.
The form will be recognised across the market by lenders, buyers, sellers and valuers. It will state if combustible materials are present in the external walls and if any further action is required. The cost of remediation works will then be reflected in the valuation. This should assist with the recent problems involving zero valuations by lenders and enable the market to start moving again.
Following the slow progress of remediation works since Grenfell and the subsequent fires at other developments, the Government has proposed plans to introduce a Fire Safety Bill and advised that building owners or managers of multi-occupied residential buildings of any height will need to assess the fire safety risks and take action or face enforcement by the relevant authorities.
This follows the new safety advice published, warning that the materials used in Grenfell (aluminium composite material (ACM)) should be removed from buildings of any height due to the significant risk that they present.
It seems that the Government is taking steps in the right direction to ensure the safety of residents in properties built using potentially combustible materials, both existing and new, high-rise or otherwise. However, the question begs, who will bear the cost? The National Housing Federation (NHF), the Local Government Association (LGA), London Councils, the G15, and the Leasehold Knowledge Partnership have all called for Government to meet the costs of removing ACM cladding from all buildings, not just the high-rise buildings previously decided. The Government has advised that they are exploring options in financing the remediation works in affected buildings; these may be to mitigate costs or provide alternative financing.
By beginning the External Wall Fire Review process, the sales and purchases of affected properties should be progressed more efficiently.
The onus is on the building owner to pro-actively assess and remediate any buildings where potentially combustible materials are present or face enforcement action to do so. All Registered Providers, whether their stock is rural or urban based, will need to take steps to review any buildings that may be affected. Given the potential scale of the task, this could be extremely costly. However, this will be balanced with the safety of the owners/tenants. Only one assessment will be required per building and it will be valid for five years or until any significant changes are made to the building. If it is not already included, it may be that Asset Registers are reviewed and updated to confirm compliance or alternatively evidence of the steps that are being taken to remediate any issues. By keeping full and updated records, this should avoid any potential delays when properties are sold and will also ensure that the values of properties are accurately and fairly reflected.
Although steps are being taken to highlight the importance of Fire Safety and enforce the need for building owners to take positive action, there is still the question of who will be responsible for the costs of remedial works to be answered. It is clear that the Government is focused on building owners proactively reviewing and remediating buildings to ensure that they are compliant.
More information on the External Wall Fire Review process and the Government proposals can be found here:
For more information contact Zayna Ibrahim in our Housing & Regeneration department via email or phone on 0333 207 1130. Alternatively send any question through to Forbes Solicitors via our online Contact Form.