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Mortgage lenders review EWS approach to combat negative impacts on market, says housing minister

Mortgage lenders are reviewing the way in which they approach risk on buildings with potentially dangerous cladding to combat the negative impacts the current process is having on the housing market, the housing minister has said.

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Picture: Getty
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Mortgage lenders to review EWS approach to combat negative impacts on market, says housing minister #ukhousing

Housing minister Christopher Pincher wrote in a parliamentary answer earlier this week that mortgage lenders have agreed at a roundtable with the building safety minister Lord Greenhalgh to take a more “nuanced approach to risk” on buildings with potentially dangerous cladding.

There are currently thousands of apartment sales that have fallen through or been paused as a result of banks and mortgage lenders being unwilling to provide mortgages without confirmation that the cladding materials on buildings are safe.

This confirmation is usually achieved by the completion of an External Wall System (EWS) 1 form by an approved building inspector, who will carry out checks and deem whether a building is safe or in need of remediation.

When the EWS process was first introduced by the Royal Institution of Chartered Surveyors in December last year, it was intended to be for buildings of 18m and over only.

However, in recent months it has emerged that banks and mortgage lenders are now asking for completed forms for buildings well under 18m. Inside Housing has been made aware of leaseholders trying to sell properties in buildings of just 9m being asked for a completed EWS forms.

Responding to a question on the EWS process from Shabana Mahmood, Labour MP for Birmingham Ladywood, Mr Pincher said: “The government is aware that some lenders are requesting valuers use the EWS1 form for a wider scope of buildings than was intended and this may be having a negative impact on the mortgage market for such buildings.

“The minister of building safety held a roundtable with mortgage lenders, who agreed a nuanced approach to risk is required. They are reviewing their policies and guidance to valuers on the use of the form.”

The answer comes as the flat sale market has been hit by a major slowdown as a result of issues with the EWS process and mortgage providers not lending until they have a completed form. Even once a form is completed, if the inspector deems remediation work is needed, leaseholders could still be trapped for months, if not years, until the work is completed.

Labour has estimated that around 600,000 leaseholders living in blocks over 18m could be affected by the issues.

However, the figure could be far higher if you take into account that a number of buildings below 18m are now being impacted.

Last month the G15, the body which represents London’s 12 biggest housing associations, reported that nearly 1,000 of its leaseholders and shared owners had become so-called “mortgage prisoners” meaning they are unable to move, remortgage or staircase on their properties because of cladding issues.

The figures also revealed that since the EWS process was introduced, only 126 buildings had undergone EWS checks, which is just a fraction of the 1,000 buildings owned by G15 landlords that need to be inspected.

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