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31 MAR 2022

Lenders update EWS1 assessments and mortgage lending

The lending and valuation industries agree that owners, and/or prospective buyers of flats should have confidence that the home they live in, or wish to buy is safe and free from fire safety defects.

In light of the recent announcements made by the Government to ensure leaseholders are protected from remediation costs associated with fixing fire safety issues in blocks of flats over 11 meters, lenders and The Royal Institution of Chartered Surveyors (RICS) are issuing the following statement to clarify the current lending position for such properties.

Providing the mortgage application meets all the lender’s other policy and regulatory requirements, we can confirm the following lending position:

  • Where the EWS1 form or equivalent assessment shows that remediation is not required
  • A1, A2 or B1 rating

Lenders will continue to lend

  • Where the EWS1 form or equivalent assessment recommends remediation
  • A3 or B2 rating

Lenders will take the necessary steps to facilitate lending where a costed and funded remediation plan is agreed with committed dates for starting and finishing all specified/required work*.

RICS supports the above, as this will enable valuers to provide a valuation within their existing obligations under RICS and international standards, which reflects the costed and funded remediation plan. RICS expect that EWS1 assessments are undertaken in accordance with the British Standards Institution’s (BSI) PAS 9980.

Lenders and RICS will continue to work with Government and key industry stakeholders to develop a proportionate approach to addressing this situation for leaseholders. This will include a further review of lending and valuation policies in relation to lending on properties rated EWS A3 or B2, once the Building Safety Bill becomes law and enshrines the statutory protections for leaseholders and details the operation of the Remediation Order regime.

*Lenders will work with the Government, RICS, the Building Societies Association (BSA), and UK Finance to establish a framework to enable verification of these key requirements, to ensure transparency for leaseholders, and prospective purchasers.

Lenders supporting this statement are:

Barclays Bank, HSBC, Lloyds Banking Group, Nationwide Building Society, NatWest, Santander

UK Finance and the Building Societies Association are working on a second phase, expanding the agreement to include more lenders in the coming weeks

RICS, UK Finance and the BSA also endorse the statement