Leaseholders – beware fake EWS1 forms

Property managers must be extremely vigilant when dealing with EWS1 forms

Another scandal of potentially epic proportions is unfolding around dangerous cladding. This time leaseholders are being targetted with fake EWS1 forms.

As if the problem of proving that buildings are safe isn’t already serious enough, now fake External Wall System or EWS1 forms are being used by scammers, misleading residents, and their mortgage companies over whether or not residential blocks are clad in dangerous materials. According to Which? in a report published on 26 August, “Leaseholders are being duped into paying thousands of pounds to fraudsters faking inspection forms amid concerns over fire safety”.

This is extremely serious. It has major implications for flat owners and their property managers and for mortgage and insurance companies who are at risk of acting upon false information. Leaseholders’ mortgages and insurance policies could be voided if their forms are found to have been faked – to say nothing of flat owners being fleeced for the expense of forms that are worth nothing and for surveys that haven’t been carried out.

 The consumer watchdog says it has evidence that at least one firm has issued fake EWS1 forms to a number of blocks across the country. Which? claims the forged forms (that are used to confirm whether a building contains materials that carry an increased fire risk) may also have been used to contract out thousands of pounds worth of remediation work. The report alleges that scammers have forged the names and signatures of qualified surveyors to pass and fail buildings. “Some forms we’ve seen have been signed off by surveyors who simply don’t exist,” says Which?  In another case, “cladding technicians without the necessary qualifications” have also apparently signed off EWS1 forms.

Which? thinks these fake forms could be used “to tender millions of pounds worth of construction work and fire safety measures to linked companies with vested interests”.

If true, this is a major problem for leaseholders. Many residents around the country are in the process of trying to sell flats in blocks that are potentially at-risk. They need these forms to be signed off in order to prove the safety of their buildings. If they are being falsified, then the whole process of finding, funding and remediating blocks with dangerous external wall systems could be put at risk. Leaseholders have suffered enough pain during this process, without adding insult to injury.

Leaseholders are already the blameless victims of the cladding crisis. Property managers should be aware of the dangers posed by falsified documents and must be extremely vigilant. They are at the sharp end of the EWS1 process and very high standards of due diligence will be needed to check that cladding specialists are who they say they are.

Read the full Which? report here:
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Surface water flooding – could you be at risk?

Is your home at risk from surface water flooding?

Could surface water flooding affect your home? It only seems five minutes since we were all complaining about the heat and already we have seen extreme weather result in flash floods in parts of the country. Surface water flooding, as opposed to rivers bursting their banks after sustained rainfall, is a risk to an estimated three million homes around the country. This type of flooding normally happens after heavy thunderstorms or rainfall when the volume of rainwater is such that it does not drain away or soak into the ground. What makes it worse is that due to its localised nature, it is very difficult to predict.

So the government is trying to tackle the problem with an independent review aimed at reducing the risk of surface water flooding across England and has announced it will implement 12 of its recommendations without delay. These will build on the existing Surface Water Management Action Plan.

The review highlights a number of ways in which the risks from surface water flooding could be more effectively managed, and it makes clear who is responsible for constructing and maintaining drainage systems – which is crucial in managing flood risk.

The recommendations aim to improve clarity over roles and responsibilities, ensure flood investigation reports take into account the views of residents and businesses and that lessons learned are shared widely. It also recommends that better advice is made available to homes and businesses at risk of surface water flooding to help them improve their own protection and resilience.

It is also good to hear that £1.2 billion is being invested in a state-of-the-art supercomputer to improve severe weather and climate forecasting which will help to more accurately predict storms. Let’s hope it doesn’t suffer from the kind of problems that too often beset government IT projects. There will also be changes in how funding is allocated to flood protection projects. The aim here is to enable surface water flooding protection schemes to qualify for more funding.

So good news for anyone whose home is likely to be at risk. But in the meantime, there are things that residents can do to protect themselves and their property, even from flash flooding. First, make sure you have buildings and contents insurance policies that provide flood cover. Second, talk to your property manager about emergency procedures in your block if there is a likelihood of it being affected by floodwater. And last but not least, make sure you know how to access the environment agency’s flood warning service. This may not always be able to predict surface water flooding but it should help to flag up areas that may be at risk. You can sign up for this free service here

An emergency bag under the bed or at the back of the wardrobe may sound daft but if you’re in a flood risk area it is a sensible precaution to take. Click here for some ideas as to what it should contain

We all hope the worst will never happen and the government is taking action to tackle flooding from all sources, but with more extreme weather being faced around the world, as people living on the Louisiana coast are finding out this morning, it is important to be prepared.
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Get on your bike – but where will you keep it?

Cycling is big news – but do we have enough bike storage to meet demand?

Get on your bike! This was the message from Prime Minister Boris Johnson yesterday as he launched ambitious plans to get us all off the sofa and out walking and cycling. As part of an initiative to help us all lose that lockdown flab, the PM announced that the Government will be rolling out thousands of miles of new protected bike lanes, cycle training for everyone, and even bikes available on prescription.

The new plan aims to build on the huge number of people who took up cycling during the pandemic. Everyone has been unearthing their old bike from the back of the shed. Buying a new cycle has been an impossible ambition as specialist suppliers like Halfords completely sold out all their stock and even decent second-hand bikes, usually readily available, have been like gold dust. The Government’s plans are clearly popular as the website set up to distribute £50 vouchers so that people could get broken bikes fixed, crashed within minutes of its launch.

But even if you can get your old bike back in working order, if you live in a flat, where are you supposed to keep it? Short of hanging it on the wall or from the ceiling of your flat – which could breach the terms of your tenancy agreement if you rent your home – many people have few options.

Modern developments often now include bike storage but are older blocks ready for a deluge of bike ownership? Anyone who has lived in a residential block has suffered a neighbour who insists on keeping their bike in the hallway outside their door. One of our property managers has even reported seeing a resident taking a motorbike up in the lift!

But bikes in common areas are a potential trip hazard and could block an exit route if a fire breaks out, so proper storage will be needed. Could developers build and demise secure bike stores for performance bikes with fully protected hinges and locks -and does a secure bike store need planning permission? These questions will need quick answers if we are all to buy-in to cycling.

Another big issue is the number of flat owners who don’t have the contents insurance that is necessary to cover a bike. Bike theft increased during lockdown but recent figures suggest that up to two-thirds of people living in flats don’t have their own insurance. Don’t just assume that your buildings insurance will cover theft. It won’t.

So don’t get caught out. Talk to your landlord or property manager about storage options. And make sure you cover your bike – if you can get hold of one – with the right insurance.
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Building safety should not be left up to residents

Building safety reform may leave leaseholders with more responsibility than they want

DAre you happy to shoulder the responsibility for building safety in your block? If not, you’re not alone. According to new research published this week and commissioned by freeholders the Savanta Group, around 75% of more than 1,000 leaseholders they surveyed are concerned about the new obligations they could be landed with as a result of the Government’s building safety reforms.

The research reveals that most leaseholders are satisfied with their current level of rights and responsibilities. But they are concerned that the new building safety obligations outlined in the draft building safety bill last week, would be a “disaster” if left to residents. And one in three even went so far as to say that if they are faced with additional responsibilities for building safety, they would be more likely to sell their property than before.

The proposed reforms, if translated into law, could radically increase the financial, legal and even criminal obligations associated with building management and include the creation of an “Accountable Person”, in charge of building safety. Residents could find themselves forced to take on this position, which involves considerable liability, should freeholders exit the market as a result of the proposed abolition of ground rent.  Is this simply not too much for residents who may be expert in their own right but not in property?  And even the very best property manager is not an engineer or facilities manager either!   So essentially all this means extra fees for leaseholders. And with the new government push towards commonhold, without the role of professional landlord, then what will prevail?

As well as the draft safety bill, last week saw the publication of the Law Commission’s report into leasehold reform, which promotes commonhold as the preferred alternative to leasehold and which would bring in a new model of shared ownership and responsibility in residential blocks.

Although 1,000 leaseholders out of the estimated 4.5 million flat owners in England is a small sample, what this latest research from Savanta tells us is that very few residents have any real interest in shouldering the burden of managing their block. They are rightly concerned that they would end up being responsible for “keeping on top of fire and safety management” which, as any property manager will tell you, is a job for a professional. In fact, our view, along with that of the Institute of Residential Property Management is that, under the new building safety regime, the role of ‘Accountable Person’ is not a role for a property manager, who in any case would struggle to get enough professional indemnity insurance to allow them to carry it out.  In truth, it is the fire safety profession that is growing – and even then property managers will have yet more to coordinate and manage.

In fact, although freeholders are largely out of favour in the current climate, they are far better placed to take on the responsibilities set out in draft bill. There are plenty of good, responsible freeholders in the property market who are well equipped – and funded – to take on problems such as building disrepair and conflict between residents. They are also able to take whole-building decisions that would be impossible for leaseholders to tackle.

All a leaseholder asks is to live in a well-maintained building that has been constructed in accordance with the building regulations, which is managed properly and retains its value. They should not be expected to shoulder the responsibility of keeping their building and their neighbours safe too. Now, it seems inevitable that they will have to shoulder the cost!
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It’s time for a town centre revival!

Could new planning laws bring life back to the high street? Photo credit: Metin Ozer

Can we expect to see a town centre revival in the next few years? The Government certainly hopes so. Changes to planning legislation, expected to be in place by September, will make it quicker and easier to demolish and rebuild unused buildings as homes, and to re-purpose commercial and retail properties to help revitalise high streets and town centres around the country. Other changes will also enable up to two additional storeys to be added to homes via a fast track approval process.

The aim is to bring people back into urban centres and make more space for new businesses, helping towns and cities adapt quickly to what consumers and business need, while at the same time reducing pressure to build on greenfield sites and deliver more homes that fit the character of their local area – but without the red tape. And if our national green strategy is to encourage people to use their cars less we need to live where our jobs are – another great argument in favour of living and working in our town centres.

The problem right now is that many of our town centres are rather depressing places to live in.   Institutional Build to Rent with flexible workspaces and amenities are coming – but not fast enough.

In reality, creating homes from commercial space can create problems for developers.  It is clear that our largely Victorian and pre-war high streets do not meet today’s requirements; parking provision is poor and expensive, units are often small with a lack of ceiling height or opportunities for mezzanine floors; basements are built on a grid system with a high number of structural partitions, and we have space to light and air-exchange requirements to meet. So retail buildings clearly present challenges. But conversely, frequently unused upper floors bring the prospect of creating on-trend loft-style units. And while we have ‘overlooking’ rules, with the appropriate screening this too could be a chance to open up atriums and create internal gardens.

With a little creative thinking, there are real opportunities for developer- led town centre initiatives.  First, one can achieve much higher densities in town centres, second, localism is unlikely to present any threats and third, making urban areas car-free is less likely to face opposition.  

We all saw the banks raise capital by auctioning off their freeholds and becoming tenants, with opportunities still remaining on our beleaguered high streets for more of the same.  Large stores could very easily downsize, lose some floors to residential, and with this autumn’s new legislation in place, have new penthouse floors on the roof.  Management company structures need not disturb the developer’s right to retail rental income, as the developer can grant his investment vehicle a head lease thereby making the retail unit a member of the management company, but removing the investment income.

So as well as loosening the planning laws, the Government needs to set a vision for the future for town centres; we need streetscapes, turnover rates, and a deadline for every local authority to put in place a town centre master plan.  We are now a ‘lifestyle’ society so the focus needs to be on what makes a town centre a place to choose to go to socialise and have a great day out.  Why can’t our town centres be dotted with children’s play areas?  Why can’t we encourage the private sector to put in free alfresco internet hubs on our high streets where once we had telephone boxes?   Why can’t this be the year that all national lottery-funded art simply has to go to our high streets?   Let’s encourage lifestyle providers to our high streets, such as hairdressers, nail salons and fitness centres, making the high street the place to go and get ready for a night out

And why can’t all building refurbishment in town centre development zones be VAT free?  That way there would be a presumption towards refurbishing our deserted department stores. Inevitably a number of lower rise buildings will need to go.  Our town centres lack people and we must bring them back. This new legislation, if used effectively, could make it possible.

It is so sad when you drive into a town centre only to see shops crudely bricked up and poorly repurposed as housing. It is time for a robust strategy and a design framework to re-claim these areas with housing that is as uniformly pleasing as our much-loved out-of-town streetscapes.

Arguably the world is now brand-driven. So if ‘Dreams’ and ‘Sports Direct’ can boast that acceptable percentages of their stores are ‘in town’ we need to tell British business that the best community initiative you can have is to send the message that ‘cool brands are in town’.

Out-of-town retail floor space has been increasing for decades, while in-town space fails. The economic fall-out from Covid-19 and the ever-increasing trend for online shopping is set to reduce retail footfall even further. So if by encouraging local government, planners and developers to work together to move the consumer into an experience-led high street within walking distance of home, then maybe we stand a chance of starting the revival we all want to see in our towns and cities.

What do you think? Will the Government’s legislation make a real difference to our high streets? We’d like to hear your comments.
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Law Commission report is both timely and welcome – but we urge caution

The Law Commission report into the leasehold sector is published this week

The Law Commission report into leasehold reform is a timely announcement, as the Government looks to restart the housing market. But we sound a note of caution.
The proposals, announced on 21 July, to streamline and simplify the process of buying the freehold of a leasehold property are especially welcome – not least because every lease is getting shorter. However, it is debatable whether the changes set out in the report will equitably offset the proposed extension to permitted development rights that was announced earlier this month. This would allow certain building owners to add another two storeys to residential blocks without planning permission, increasing what is known as the ‘hope value’ of a building, and therefore making the purchase of the freehold of a building more expensive. So despite the clear benefit of the proposed reforms, the Government could simply be giving with one hand and taking with the other.
Improving leaseholders’ right to manage their building is also welcome, especially in smaller blocks where, if there is harmony among leaseholders, self-managing may be an option. This means insurance commissions can be saved, and budgets and major works plans can be set by those who want to maintain their asset value, rather than by an absentee freeholder who, disillusioned by the diminishing value of his reversionary interest, may have given up!
The Law Commission’s report into leasehold reform also carries the oft-repeated call for converting leasehold flats into commonhold. Unfortunately this is not as simple a solution to the woes of leaseholders as people think. In fact, it would create a lot of grey areas around building management – and would impact the ability of managing agents to stand as directors for Resident Management Companies because not one leaseholder can be found to step forward as a director.

Commonhold is not a silver bullet; like all forms of tenure it comes with its own problems. Many institutional investors such as pension funds and insurers have invested in freeholds and ground rents provide them with an important income stream to match their liabilities. So with many major investors losing out on revenue during the Covid-19 outbreak as shopping centres and offices have remained closed, any move towards commonhold must be made while bearing this fact in mind.

For more on leasehold reform read our previous blog here.
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Code of practice for agents – have your say

The new code is out for consultation until 4 September

A proposed code of practice for property agents is now out for consultation, so block managers can take a look and comment on the proposals. These include 14 recommendations made by Lord Best in his Regulation of Property Agents report published last year. The code proposes a set of principles underpinning the professional standards that will be expected of residential property agents in the future.

The Code is split into two sections: ‘Dealing with consumers’ and ‘Managing businesses and staff’ and it applies both to the conduct and behaviour of agency firms and to agents as individuals. It will apply to anyone working in property sales and to lettings agents and property managers, as well as to auctioneers and property guardians. The code will also sit above the sector-specific codes that already regulate agents working in particular markets such as leasehold, retirement housing and build-to-rent.

The 14 recommendations are:

  • Agents must act legally, ethically, with honesty and integrity.
  • Agents must seek to avoid conflicts of interest, and where this is unavoidable, declare all conflicts of interest and ensure these are managed properly.
  • Agents must treat all consumers fairly and equally.
  • Agents must comply with all relevant legislation.
  • Agents must act with due skill, care, and diligence.
  • Agents must communicate clearly, accurately, and transparently to represent correctly their service or product.
  • Agents must report breaches of the relevant code(s) to the new Regulator.
  • Agents must be open and transparent with the new Regulator about matters that might affect their or others’ trust in the profession.
  • Agents must disclose and report any information relating to a property that could threaten a resident’s safety or does not conform to relevant mandatory property standards.
  • Agents must manage their businesses and staff effectively.
  • Agents must make appropriate arrangements to protect consumers’ money.
  • Agents must maintain appropriate accounts and records (*) of their business activities.
  • Agents must ensure that all staff are qualified and capable to handle responsibilities delegated to them.
  • Agents must handle information sensitively and in accordance with data protection legislation.

If you think some of these proposals sound woolly and are wondering exactly what they mean, the full consultation explains in detail what will need to be done to comply with each point.

And regulation just got serious because, in future, a serious failure to meet the new standards could mean regulatory or criminal action being taken against an agency and/or its staff. So this consultation is a really important one and is well worth contributing to if you have strong views.

To read the full consultation paper and to have your say click here.
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What does the new Building Safety Bill mean for you?

Today’s draft Building Safety Bill has been a long time coming. But we hope it will be a major step forward in improving levels of safety in residential blocks. The new legislation is based on the recommendations of Dame Judith Hackitt’s building safety review, which was carried out in the wake of the Grenfell Tower fire in June 2017. The Government accepted the review’s recommendations in full and today’s draft Bill, which sits alongside the Fire Safety Bill published in March, sets out how they will be taken forward.

For leaseholders, the proposals will mean big changes to the way safety in your block is managed and regulated.

  • A new role of the ‘Accountable Person’ will be created to make sure there will always be someone responsible for keeping residents safe in high rise buildings – blocks that are 18 metres high and above. Whoever takes on this role will also have to listen and respond to residents’ concerns and ensure their voices are heard.
  • A new national regulator for building safety is being created within the Health and Safety Executive. This new regulator will ensure that high rise buildings and their residents are being kept safe; it will have new powers to raise and enforce higher standards of safety and performance across all buildings. The regulator will appoint a panel of residents who will have a voice in the development of its work.
  • In future residents and leaseholders will be given access to safety information about their building so that they can have an input and ensure any issues they raise are listened to.
  • There will be new complaints handling requirements to make sure effective action is taken when concerns are raised.
  • A new ‘building safety charge’ will make it easy for leaseholders to see and know what they are being charged for when it comes to keeping their building safe. But, to make sure that these costs are affordable, the costs that can be re-charged to leaseholders will be limited.
  • For the first time, new build homebuyers will have their right to complain to a New Homes Ombudsman, protected in legislation, and developers will be required to be a member of the scheme. The New Homes Ombudsman will hold developers to account and will have the ability to require developers to pay compensation.

We welcome the new Bill and we are also pleased to hear the Government’s stated commitment today “to making sure that leaseholders won’t pay unaffordable costs for historic repairs to their buildings”. The Government says it will continue to engage with stakeholders, including leaseholders, on this issue while the draft Bill is being scrutinised by Parliament. It has also committed to “speeding up work with the finance and insurance industries, to protect leaseholders from unaffordable costs of fixing historic defects, but without relying on taxpayers’ money”. And recently raised insurance issues around building safety will also be tackled.

This is all good news. Let’s now hope the government can deliver all it is promising without delay. It has been three years since Grenfell. Leaseholders in blocks around the country badly need action – they can’t afford to wait any longer.

You can read the new Building Safety Bill in full on the Government website here.
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Lenders to rethink cladding safety forms

The Housing Minister has confirmed that lenders will review the EWS1 form

Mortgage lenders are to ask the Secretary of State for Housing, Communities and Local Government, what recent assessment he has made of the effect of the installation of External Wall Systems (EWS) on the ability of leaseholders to sell properties fitted with flammable cladding.

In response to a question in Parliament earlier this week, Housing Minister Christopher Pincher has confirmed that mortgage lenders are to review their use of External Wall System or EWS1 forms.

The Housing Minister said the Government is aware that some lenders are requesting valuers use the EWS1 form on a wider scope of buildings than was intended and he accepted that “this may be having a negative effect on the mortgage market for such buildings”; a master[piece of understatement, given that hundreds of leaseholders around the country are finding it impossible to move or re-mortgage as a result of these forms.

However, the situation may be improving now that the Minister for Building Safety has held a roundtable with mortgage lenders, who agreed a more “nuanced approach to risk is required”. According to Christopher Pincher, they are reviewing their policies and guidance to valuers on the use of the form. If true, we hope any re-think is quickly translated into action for those flat owners who are desperate to sell their homes but whose flats have been blighted by zero valuations from mortgage lenders.

Ringley Group MD Maryanne Bowring is an expert speaker on the topic of EWS1 forms and their impact on the leasehold market. She says “I have heard of a case where a mortgage valuer requested an EWS1 form on a bungalow – which seems just blatant abuse of the intended purpose. Since government guidance changed to require that ‘anything that assists a fire’ on the ‘external wall system’ needs to be addressed, and that this applies to all buildings irrespective of height, the common sense principle of means of escape certainly in lower-rise buildings seems to have been wholly overlooked”. 

We support a review of guidance and are concerned as to the blight affecting many homeowners, not only struggling to sell but to remortgage too.
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Flood risk homes to get more protection

Is your home at risk from flooding?

Flood risk is a major problem for millions of homeowners. So a new strategy to make homes more resilient and improve flood management is good news. Yesterday the Environment Agency set out a plan to better protect and prepare millions of homes and businesses in areas where flooding is a problem.

The Agency estimates that more than 5.2 million properties in England are already at risk, and climate change will lead to even more people being affected. With more extreme weather expected, including summer temperatures up to 7.4˚C hotter and 59% more rainfall by 2050, the new Flood and Coastal Erosion Risk Management Strategy sets out how to tackle the problem during the next decade.

Measures will include:

  • Expanded flood warnings by 2022 to all at-risk properties, with 62,000 more families to be added to the service
  • Increased investment in natural flood management schemes to better protect communities, tackle climate change and create new wildlife habitats
  • Further promote the use of property flood resilience measures to help homeowners recover more quickly from flooding
  • More collaborative partnerships with national road, rail and utilities providers to promote better flood resilience and benefit the public.

The new strategy was announced alongside details of the £5.2 billion that will be spent on flood protection up to 2027, plus a further £200 million for resilience measures in 25 areas around the country.

There will also be reforms to the FloodRe insurance programme based on a review of the scheme published last July. Flood Re is a government insurance scheme that gives access to affordable insurance for hundreds of thousands of homes at high risk of flooding.

The proposed changes include:

  • offering discounted premiums to households that have fitted flood resilience measures such as airbrick covers or non-return valves.
  • claims payments to include an additional amount to help homeowners refurbish their damaged property in a more flood resilient way.

This news is very welcome, especially as climate change makes widespread flooding likely to become more frequent. To read more about what to do if your home is threatened by rising floodwater, read our blog on this topic here.
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