Changing advice on building and fire safety and mortgages for leaseholders
This guide for residents explains the effect that the Government’s building safety advice is having on leaseholders, and how FirstPort – as the property manager – is responding to these.
Changing Government advice regarding building safety is impacting thousands of properties across the UK, making it difficult for a large number of homeowners to secure mortgages as many lenders are now requesting what is known as a ‘statement of compliance’. This certificate needs to be signed by an independent qualified professional advisor recognised by Government.
There has been updated and consolidated advice from Government recently, but the core issues remain. There is a shortage of capacity in the industry meaning that undertaking surveys and assessing buildings is often taking a long time. Where further action and remediation of buildings is needed, residents are currently exposed to costs for this and a resolution to this issue has not yet been found.
Alongside others within the industry, as well as action by MPs, FirstPort is seeking support from Government to unblock these challenges in a way that continues to meet the requirements of new guidance.
Over the last few years we have seen new Government advice introduced for residential buildings both in terms of fire and building safety. At FirstPort we work hard to ensure the safety of our residents and we have been supportive of these steps.
However, we recognise that this changing advice is having significant consequences for building residents – including impacting their ability to secure mortgages, and exposing homeowners to high costs required to survey and remediate buildings.
Advice for multi-storey, multi-occupied residential buildings
Since June 2017 the Ministry for Housing, Communities and Local Government (MHCLG) has published a series of advisory notes relating to building safety.
In January 2020 this was consolidated into a single document: Advice for Building Owners of Multi-storey, Multi-occupied Residential Buildings. This advice asks that building owners review the design, installation and composition of the structure of external wall systems. It covers the materials used and also how facades were put together, as well as certification of the methods taken and procedures followed during construction.
Initially, this requirement was applied to all properties over 18 metres (roughly 5 or 6 storeys). However, the more recent consolidated advice has extended this to all residential buildings where external wall systems are in place. It is estimated that tens of thousands – if not millions – of buildings in the UK are affected by this issue in some form.
Keeping residents safe
The residential buildings currently managed by FirstPort were designed and signed off by the appropriate building control authority in line with building regulations at the time of their construction. Since then, regular fire risk assessments have been undertaken to understand and manage safety risks, including acting on any findings.
What has changed since these buildings were signed off is that this new advice from Government proposes that buildings should now be assessed in line with new standards. The number of buildings affected across the UK, and the comprehensive nature of the works that can be needed to meet these new criteria, is creating challenges for both homeowners and those responsible for managing these buildings.
FirstPort’s response to Government advice
FirstPort is supportive of the safety measures being brought in by the Government. However, we also understand the challenges these are causing for residents. Since December 2018, FirstPort has sought to undertake checks of buildings it manages against the new Government requirements. As property manager, FirstPort’s role is typically to coordinate activity to secure this information but in all cases we are reliant on other parties to do so.
This exercise has largely been undertaken through desktop research and reviewing the original paperwork available relating to the construction of the building. In many cases, detailed drawings and specifications are either no longer in existence or were not handed over following construction. Even when documentation is available, this cannot be guaranteed to verify the nature of the structure against the new standards now being set by Government.
Impact on mortgage lending
This research was overtaken in late summer 2019 when some mortgage lenders began to refuse to offer mortgages unless the building owner could demonstrate that the entire external wall system complied with new Government advice. This is usually requested in the form of a ‘statement of compliance’, which is sometimes also referred to as a safety certificate, or more recently as an ESW1 form.
This certificate needs to be signed by an independent qualified professional advisor who belongs to one of 21 professional bodies recognised by MHCLG. It cannot be provided by either the building owner or the property manager, meaning that the capacity of suitably qualified fire engineers nationally is limited.
Challenges to securing a statement of compliance
Obtaining the information being requested by some mortgage lenders in line with Government advice is a national challenge affecting properties across the UK. Where certificates cannot be provided based on existing information, producing a report to satisfy the requirements of the Government advice requires time and money to cover the resource of specialist advisors.
When a specialist fire engineer is asked to confirm compliance with the advice they will normally conduct an invasive test of a building, taking samples of external wall materials and assessing the construction of the entire external wall system (typically comprising a combination of construction supports, insulation and external-facing materials).
In some cases, the building can be certified as compliant, but in many cases further testing may be required. Once intrusive survey works are completed, this does not guarantee that the statement of compliance can be provided. The complex nature of building structures means that in many cases further investigative work can be required, or remediation may be needed to retrospectively ensure the building meets the requirements of the new Government advice.
The increase in mortgage lender requests for statements of compliance, and the requirements in place for the statements of compliance to be signed off by a specific group of suitably qualified advisors has created a backlog of work across the country. This situation has been made more challenging still following further changes to guidance in January 2020 to also cover buildings below 18 metres.
The expertise required to produce a report also requires a high level of professional indemnity insurance, which is further narrowing the pool of advisors available to do this work.
One recent intervention was the development of what is known as an External Wall Systems 1 (ESW1) form, which was introduced in December 2019. The intention of this form was to provide a standardised system for buildings to be certified, making the process quicker and simpler. Unfortunately, EWS1 has not proven to be the solution that was hoped for and has only removed the requirement for a physical and intrusive inspection in a very small proportion of cases.
As a consequence of this situation, a large number of homeowners nationwide are finding it difficult to mortgage, re-mortgage or sell their properties – creating huge concerns and personal challenges. As property managers we come across and hear of these practical challenges every day.
At FirstPort, we have been working hard with many parties trying to find a practical solution both to ensure buildings have the appropriate safety measures and to supplying a statement of compliance wherever possible. However, the challenges over insufficient industry capacity to undertake surveys means that a resolution to more complicated cases could be many months away. We can only recommend that residents who find themselves in this situation contact their mortgage lender or their buyer’s lender to seek advice on how best to proceed. Different lenders have different requirements and not all mortgage providers may require a statement of compliance.
However, in the majority of cases, further Government intervention is needed to unblock the challenges associated with applying the recent changes, guiding priorities, and paying for remediation. FirstPort is continuing to call on Government bodies to act and encourage residents affected by this to speak to their MP.
Working with others within the industry, we are seeking a realistic proposal from the Ministry of Communities and Local Government on how buildings can be brought into line with the new guidance. We believe Government should provide support – including financial assistance and clearer advice – to ensure residents are not exposed to costs associated with remediation. Without this, there is no simple and rapid resolution for homeowners up and down the country.
This is a national issue that requires a Government-led solution, but we are doing everything we can to assist customers on a site-by-site basis. If you are a FirstPort customer requiring a statement of compliance, the team processing these enquiries can be reached on email@example.com. Please be aware that due to the volume of requests we are currently receiving, it is currently taking around five to seven working days for the team to respond to your messages.