Ministerial Working Group on Mortgage Lending and Cladding: report - March 2021

Report and recommendations of the Ministerial Working Group on Mortgage Lending and Cladding.

Appendix II - Quick Reference Table mapping Challenges, Solutions and Recommendations

Challenges Solutions Recommendations
Clarity on when an EWS1 assessment is required, who can provide it and how to source an appropriately qualified and insured professional

In 2020 RICS confirmed that they would review the operation of the EWS1 approach. In November 2020 it was announced that RICS would develop new advice for surveyors to enable them to take a more proportionate approach and reduce the number of buildings where an EWS1 is needed.

The Group supported, and contributed to, the development of the RICS guidance on when an EWS1 might be needed. Following a public consultation RICS published this guidance on 8 March 2021 and it is effective from 5 April 2021. The guidance sets out clearly and concisely the factors a valuer should consider in determining whether or not an EWS1 should be required.

The Scottish Government is developing a Scottish Advice Note on External Wall Systems, intended to give practical advice on determining the fire risk posed by external wall systems on life safety grounds. This will include advice relating to specific types of buildings and materials. Members of the Group have been engaged in that work.

The Group was aware that there is a need to avoid unintended consequences from the publication of the Scottish Advice Note. The Scottish Government has stated it intends to publish the Scottish Advice Note in 2021 following further targeted consultation.

The market for professional indemnity insurance is a limiting factor in the availability and affordability of securing appropriately qualified professionals to undertake EWS1 assessments

The Scottish Parliament does not have powers in relation to financial services, including mortgage lending and insurance. Challenges in the professional indemnity insurance market are common across the UK.

In February 2021 the UK Government committed to work on a targeted, state-backed indemnity scheme for qualified professionals unable to obtain professional indemnity insurance for the completion of EWS1 forms. Further details of this scheme are not yet known. The Scottish Government has raised with the UK Government that in seeking to address the current issues that this is not limited to only EWS1 assessments but applies to other assessments and surveys that need to be undertaken to determine safety risk. The Scottish Government has also said that intervention should not be so narrow that it provides a temporary fix to challenges in relation to EWS1 but not the broader issue of professional indemnity insurance for other building safety work that may be needed. To do so would be to focus on property transactions rather than the bigger picture of the safety of people.

1, 20, 21
The lack of single EWS1 assessment per building (often driven by the need to obtain appropriate consent of multiple owners or the limits of professional indemnity insurance in place) means varying ‘rewrite’ costs for other flat owners when they come to sell or remortage their property
Challenges for homeowners in issues such as insurance cover and knowing
what to do next if an EWS1 report points to action being needed that would affect the value of the flat before a lender will agree to lend on that flat – particularly if remediation is expected to be costly and would need agreement of multiple co-owners
Multiple ownership of flatted buildings in Scotland meaning that EWS1 assessment is operating on an individual flat basis rather than for a whole building, as originally intended

A single assessment for an entire building is desirable and in the public interest. While developments such as the High Rise Inventory (providing information on the construction and fire safety of domestic buildings of 18m and above) provide a starting point, it is imperative that Scotland is able to build a better picture of the risk profile of affected buildings as the first step to utilising public funds for remediation.

Assessment of buildings, if designed in a way to build confidence in its output, would move us from a position of broad categories of buildings that are subject to EWS1 to a defined group of buildings that require attention and can be considered for remediation support.

Providing Scottish Government funding for these single building assessments could be a practical way through the challenges of multiple owner agreement and ensure that the risk profile of buildings is understood on a consistent basis.
While this approach will still be subject to challenges of suitably qualified people being available to undertake the work, adopting a planned, prioritised and phased approach to utilising the limited resource this way, rather than on an individual flat by flat basis through EWS1 or in response to the demand that may be created by the Scottish Advice Note, is sensible. This would also help support homeowners trying to navigate the current system of instructing EWS1 on an individual basis without clear support or guidance on what happens next.
The Group noted funding developments in England and support for remediation and leaseholders. The Group has not considered in detail models of remediation funding for Scotland, as this would need to follow the evidence and knowledge of overall availability of funds in Scotland from a variety of sources. Further detail is urgently required from the UK Government on the implications for Scotland of announcements made in February 2021.

A full review of possible legislative options was undertaken to support the Group in its work, with a focus on existing powers given the time needed for primary legislation. No provisions were identified that could be used to support, require or enforce a single EWS1 assessment report being provided for a building in multiple ownership.

The Group did consider some limited further options (Fire (Scotland) Act 2005 and Building (Scotland) Act 2003), that while not applicable to EWS1 could have some relevance to advancing solutions by securing an assessment of a property on grounds of fire safety or building standards compliance.

There were mixed views within the Group about the merits of the existing legislative options. Ultimately, primary legislation would be needed to address long-standing challenges around buildings in multiple ownership. On pragmatic grounds, to enable swifter action, other solutions were explored.

13, 24 - 37
Concerns about whether the process is vulnerable to fraud

The Group has considered the potential for fraud from the EWS1 process, and although evidence had not been seen of this being of concern in Scotland, developments such as the EWS1 portal, operated by the Fire Industry Association, were seen as helpful.

Alongside its guidance published in March 2021, RICS published updated details of relevant professional bodies whose fully qualified members may be able to undertake an EWS1.

5, 8-12, 15, 19, 21, 23, 36



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