The Cladding Scandal: What You Need to Know
Updated: Feb 12, 2021
*This blog has been updated as of 12/2/2021 to include the most recent updates on the cladding scandal.
It's been three years since the Grenfell Tower tragedy, however it seems the government and property industry have yet to deal with the issue at the heart of the fire: cladding. There has been a significant amount of concern surrounding the issue of cladding, as the number of affected buildings continues to rise. In London alone, there are 573 blocks of flats still needing assessment/changes made. That number is up from just 286 in March 2020.
Whether you are looking to sell your apartment or looking at buying a property and worried about cladding risks, here is everything you need to know.
4 Things About the Current Situation
1. Many buildings with noted dangerous cladding still have 24/7 fire safety patrols in place, which was only supposed to be a temporary safety measure. Thousands of homeowners are being forced to pay for this service due to being leaseholders (more about this below).
2. Government research suggests that a typical flat owner has to pay £137 per month towards safety measures, on average, with this total rising to £256 if the flat is located in London.
Due to this cost, some owners have resorted to starting their own safety watches to try and keep the cost down.
3. On a positive note, most of the external cladding has been removed from high risk blocks, however entire walls need to be demolished and rebuilt in order for the flammable materials to be completely removed. Contractors working on sites are saying this task is too difficult, meaning some materials will have to stay in place alongside extra safety measures like the patrols to prevent a fire.
4. Replacing all highly flammable materials still seems to be the preferred method from the government, who have ignored other potential methods such as common fire alarms in all affected buildings. They had ignored this suggestion until recently when they announced that there is a new £30million pound fund to help pay for this and end the excessive 'waking watch' costs.
What is the External Wall Fire Review (EWS1)?
The EWS1 certificate was introduced shortly after the Grenfell tragedy and is a way of assessing all high rise blocks of flats across England to ensure this never happens again. All high rise blocks need to be signed off under this certificate, however recent new measures have meant that more buildings need to be assessed. Originally, there were around 1700 buildings that needed the certificate, but this has now risen to tens of thousands, making the wait time even longer.
Not only has the amount of buildings waiting to be assessed risen dramatically, but there are not many chartered surveyors that are actually skilled or equipped to rule on these matters. There are less than 300 chartered surveyors across the whole of the UK who are qualified to do so. This, coupled with the pandemic, means there is a huge backlog of work to be done.
This also means that many surveyors cannot value a property until the paperwork covering the technical specification for cladding is provided. We are effectively at a stalemate, awaiting the latest RICS guidance after the last consultation paper which closed on the 25th January 2021.
In London's Canary Wharf, at least 60% of the buildings have not been issued the EWS1 certificate, which means those looking to sell can't and those looking to buy are unlikely to get a mortgage. This, combined with the recent fall in demand for smaller flats with no outside, has led to a dramatic fall in transactions.
Selling and Buying Affected Property
Due to so many blocks not being issued the EWS1 certificate, flat sales were down by almost half in September 2020 compared to the previous year. Blocks that fail the EWS1 check are valued at £0, meaning they cannot be mortgaged and are impossible to sell. Future plans are on hold for many who are effectively locked into ownership of their flat and unable to climb the housing ladder because they cannot sell.
Many lenders are refusing mortgages for those wanting to buy properties in blocks of flats with cladding issues, until there is an EWS1 in place. It has come to light that many lenders are not being consistent in their approach to this situation, although it's hard to be consistent with little advice to go on.
This is affecting many who are part of the leasehold system. If you are a leaseholder, it means you own your flat, but you don't own the actual building where the flat is located and you don't own your property outright. The buildings are owned by freeholders, who issue a service charge and/or ground rent, which is what has led to the huge safety bills for homeowners, who this bill falls on. The only advice and guidance coming from the Housing Ministry right now is that the seller is obliged to confirm whether or not the building has potentially flammable cladding. They have provided a list of professionals who can carry out the EWS1 checks, however as we already stated above, there are far too few surveyors who are actually able to issue the certificate spread out across the UK.
The cladding scandal continues to get more attention as more people are left in the dark about what's going on with the building they live in. This can only mean that the government will be forced to put in place further measures to support those in need. It is likely that there will be any reference to cladding announced in the 2021 budget, so until then, we will have to wait and see what happens.
Have you been affected by the cladding scandal? Get in touch so we can hear your story!
On Wednesday 10th February 2021, the government announced an extra £3.5 billion for unsafe buildings over 19m high. However, this does still mean many residents in lower blocks are being asked to pay out for protection from and removal of the unsafe materials, which could lead to financial ruin.
The government also announced a loan scheme would be set up to protect leaseholders from financial ruin. They are being told that residents in lower blocks would not have to pay more than £50 per month for the removal of unsafe cladding.
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Normette Homes specialises in property investment and tenant sourcing.