As a prospective homebuyer in the UK, staying informed about the various factors affecting your ability to secure a mortgage is crucial. One significant consideration is a property’s external wall system (EWS). In recent years, EWS has gained attention due to safety concerns related to cladding materials. The presence of certain types of cladding can impact not only the safety of a building but also its marketability and mortgage eligibility. This blog post will provide a comprehensive review of the issues surrounding EWS1 and how it can affect your journey towards purchasing or remortgaging a property.

UNDERSTANDING EWS AND CLADDING MATERIALS

Before delving into the implications, let’s start by understanding what an external wall system (EWS) entails. An EWS refers to the collection of components that make up the exterior facades of a building, including insulation, cladding materials, firebreaks, and more. It is designed to provide weatherproofing and thermal insulation while also contributing to the overall aesthetics of the structure.

The material used for cladding is a critical aspect of an EWS. Traditionally, materials like brick or stone were used for their durability and fire-resistance properties. However, in recent years, there has been an increased use of combustible cladding materials such as aluminium composite panels (ACP) or high-pressure laminate (HPL). While these materials offer design versatility and cost-effectiveness, they have raised concerns regarding fire safety standards.

THE IMPLICATIONS FOR MORTGAGE ELIGIBILITY

Due to well-publicised incidents like the Grenfell Tower tragedy in 2017, concerns about fire safety have become paramount within the UK housing market. These concerns have prompted lenders and surveyors to take a cautious approach when considering properties with certain types of cladding.

The External Wall Fire Review (EWS1) form is crucial for this scrutiny. The EWS1 form was developed by the Royal Institution of Chartered Surveyors (RICS) in collaboration with various stakeholders to assess the fire safety risks associated with external wall systems. This form has become a pivotal requirement for mortgage lenders and insurers when considering properties in multi-story buildings or those with specific cladding materials.

The presence of combustible cladding, as highlighted in an EWS1 form, can impact both the availability and cost of mortgage financing. Lenders may hesitate to provide loans on properties that pose fire safety risks, while insurers may impose higher premiums or even refuse coverage altogether. This creates significant challenges for potential buyers looking to secure a mortgage on affected properties.

NAVIGATING THE IMPACT ON PROPERTY VALUE

In addition to the hurdles faced during mortgage applications, it’s essential to consider how EWS issues can affect property values. The negative publicity surrounding high-profile incidents and subsequent investigations have created widespread buyer awareness and concern, leading to declining demand for properties with potential fire safety risks.

Properties subject to EWS1 assessments may experience delays in sales transactions due to additional checks and requirements for remedial works. Moreover, some lenders may only offer mortgages at lower loan-to-value ratios or apply stricter lending criteria when dealing with such properties. These factors can result in lower property valuations and longer marketing times, further complicating the selling of an affected property.

SEEKING RESOLUTION: REMEDIATION EFFORTS AND GOVERNMENT INTERVENTIONS

Recognising the urgent need for action, the UK government has implemented measures to address the cladding crisis. Various funds have been established to support building owners in undertaking necessary remediation. However, these initiatives need help with limited funding availability and extended timelines for remedial projects across numerous affected buildings.

In parallel, industry stakeholders are working towards establishing more comprehensive guidelines and standards for fire safety and cladding materials. These efforts aim to clarify to lenders, surveyors, and buyers regarding acceptable levels of risk and appropriate remediation measures.

CONCLUSION: NAVIGATING THE COMPLEXITIES OF EWS IN PROPERTY PURCHASES

As a UK house buyer, understanding the implications of EWS on your mortgage eligibility and property value is vital for making informed decisions. The presence of combustible cladding materials can pose challenges during the mortgage application process, potentially limiting financing options or increasing costs. Furthermore, affected properties may experience reduced market demand and longer selling times.

While government interventions and industry initiatives are underway to address these issues, staying up-to-date with developments and seeking expert advice when navigating the complexities of EWS-related matters is essential. Doing so ensures that your property purchase aligns with your safety requirements and financial goals. 

At the same time, those looking to sell should explore all available options for addressing combustible cladding or insulation on their building. Although remediation may be costly, it could help reduce potential risks and enable you to realise the maximum value of your property. 

The Scottish Government is considering free building assessments to establish the extent of the cladding issue in the country. Although a proposal at present, the Single Building Assessment programme is pencilled in to start this summer. It would remove the need for homeowners to pay for an EWS1 and pave the way for £97m of public money to be spent on remediation for affected buildings. 

Guide to the EWS form and process.

In a significant shift in policy, in January 2022, levelling up minister Michael Gove has given developers two months to agree to a plan to fund remediation costs, estimated at £4bn, or face legislation. As part of this, the minister has said leaseholders living in their flats will not face any costs to fix dangerous cladding, with developers and cladding companies paying instead. The move is in addition to the forthcoming developers’ levy, which is set to raise £2bn over a decade to pay for cladding remediation costs.

Separately, the minister has now written to the Construction Products Association, setting out that product suppliers will be expected to contribute alongside developers, too. 

The importance of consulting a mortgage broker must be balanced, especially for homeowners dealing with the EW1 cladding issue. Here’s why you should take this crucial step:

• Expertise: Mortgage brokers specialise in finding solutions for challenging situations like cladding issues. They have the expertise to navigate the complexities of the mortgage market.

• Customised Guidance: A broker will provide personalised guidance tailored to your situation. This is not a one-size-fits-all approach but a customised strategy to meet your needs.

• Saving Time and Money: By working with a broker, you can avoid the frustration of multiple mortgage rejections and time-consuming research. They streamline the process, ultimately saving you both time and money.

• Peace of Mind: Knowing that you have a mortgage expert in your corner can provide peace of mind during a stressful situation like dealing with the EW1 cladding issue.

In summary, EWS is a crucial consideration when buying or selling property in the UK, as it can directly impact financing and pricing. Careful planning and staying informed of industry updates are vital to ensuring successful outcomes on both sides of the transaction. 

Ultimately, it’s essential to consult an experienced professional who can provide tailored advice for your unique circumstances to ensure that you make the best decisions when buying or selling property with EWS considerations. With the proper guidance, you can protect yourself from potential risks and maximise your investment. 

Ready to make informed mortgage decisions? Contact us for expert guidance. Our experienced team of mortgage specialists is here to assist you every step of the way. Whether you’re a first-time homebuyer, home mover or looking to refinance, we can place you with the right experts to provide personalized advice tailored to your needs.