The Royal Institution of Chartered Surveyors (RICS) has released updated guidance for property valuations of flats in multi-storey residential buildings affected by cladding. This move is designed to provide greater clarity for valuers and lenders, potentially unblocking the sales market for thousands of homeowners who have been trapped in unsellable properties due to external wall system concerns.
The revised guidance, which came into effect recently, aims to clarify when an External Wall System Fire Review (EWS1) form is, or is not, required for mortgage valuations. Previously, an overly cautious approach led to many flats requiring an EWS1 form, even in buildings where fire safety risks were deemed low. This often resulted in significant delays, high costs for building owners to obtain the forms, or outright refusal of mortgages.
A key aspect of the updated advice is its application to buildings of any height, moving away from the previous focus primarily on those over 18 metres. It specifies that an EWS1 form should only be required where there are specific concerns about the external wall system, rather than as a default for all buildings with cladding. This includes situations where combustible materials are present, or where there are known fire safety defects that could pose a significant risk.
The implications for homeowners are substantial. Many flat owners have faced immense stress and financial hardship, unable to sell or remortgage their properties for years. This new guidance is expected to reduce the instances where an EWS1 form is requested, thereby speeding up the valuation process and making it easier for buyers to secure mortgages. For first-time buyers, this could mean a wider range of affordable flats become available, as the 'cladding crisis' premium or unmortgageable status is lifted from some properties.
While this is a positive step, it does not fully resolve the underlying issue of remediation costs for dangerous cladding. The guidance primarily addresses the valuation and mortgageability aspect, rather than the physical removal and replacement of unsafe materials. However, by easing the transaction process, it provides some relief to a market segment that has been severely impacted since the Grenfell Tower tragedy.
The updated guidance reflects ongoing efforts across the industry and government to bring proportionality and common sense to the assessment of fire safety risks in residential buildings. It is hoped that this will restore confidence in the market for flats, which have seen slower price growth compared to houses in recent years, partly due to these challenges. According to Halifax, average house prices in the UK saw a modest increase of 0.3% in April 2024, but flats have often lagged behind, particularly in areas affected by cladding issues. Easing these valuation hurdles could help to rebalance regional property markets.
Source: Royal Institution of Chartered Surveyors (RICS)