The Grenfell Tower fire, which tragically claimed the lives of 72 residents in the summer of 2017, was a watershed moment for building and safety rules in the UK.
A subsequent enquiry found that the deadly spread of the fire was due to the flammable nature of the external cladding, which had only been installed two years prior. Constructed of aluminum composite material (ACM), new building regulations were introduced in response to the incident, prohibiting its use in buildings taller than 18m.
However, whilst this move would ensure the safety of newly-built structures, there were still uncertainties surrounding its impact and applicability to existing buildings that already had the potentially dangerous cladding installed.
Who would be expected to pay for required inspections and work and how easy is it to sell a property that has been affected?
Post-tragedy advice
Following the tragedy, the Government established a Building Safety Programme and launched an independent review of building regulations and fire safety. High-rise buildings with the most dangerous ACM cladding were identified and interim measures were introduced to protect residents whilst remediation works took place.
In December 2018, the Government issued Advice Note 14 concerning cladding that did not incorporate ACM, and whilst not a legal requirement, the note urged building owners to take ‘general fire precautions’ and to make sure external wall systems were ‘safe’.
However, it was difficult for many owners to arrange the required BS 8414 test assessing material combustibility, due to a lack of available surveyors. This was then compounded by delays with the physical removal of cladding, which then impacted the sale of flats once mortgage lenders understood the new guidance.
With no certificate to prove Advice Note 14 compliance, some flats within impacted buildings were given a value of £0 or well below the asking price, and in turn, lenders were unwilling to provide mortgages on properties deemed to be worthless.
Whilst the Government initially announced a £600m fund for the removal of ACM cladding and a further £1b for the removal of similarly dangerous, non-ACM materials, it was nowhere near enough to cover the extent of the problem.
The value of EWS1 certification
Unfortunately, almost six years on, there are still many buildings impacted by the presence of dangerous cladding, which is creating issues for shared owners and leaseholders looking to sell their flats.
Although it isn’t a legal requirement, the acquisition of an External Wall System Fire Review certificate (EWS1), will help significantly when a leaseholder is buying, selling or remortgaging an apartment in a multi-occupied residential building.
An EWS1 certificate proves the building is safe, and without it, lenders may still undervalue the property. According to RICS Guidance, buildings of four stories or under will not need the certificate, however most buildings above six stories with any form of cladding will require certification before they can be sold.
That being said, certificates can be difficult to obtain as they must be organised by the freeholder – an individual leaseholder cannot commission one, so it is up to the landlord as to whether an inspection is made. They can also take 6-12 months to secure and are only valid for five years, so it is important for building owners to be proactive in achieving compliance.
For those individuals looking to sell a flat that has cladding or still requires remediation, some risk/impact is to be expected. Whilst you will not be prevented from selling an affected flat, the asking price may be reduced to attract potential buyers.
Freeholder or leaseholder responsibility
The argument between freeholder and leaseholder responsibility is contentious, but unless the freeholder has some inherent liability then it is unlikely they are going to pay.
It is more likely that the flat leases will allow the freeholder or management company to recover the cost of the removal and replacement of cladding through a service charge, the cost of which will be expensive and could force many to borrow the required funds.
If this is the case, then the flat owner will need to disclose the service charge to a potential buyer and expect some sort of impact on the asking price.
Whatever the circumstances may be, it is always best to seek the support of an experienced conveyancing team, as they will guide you through the process as smoothly as possible.
