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My EWS1 Olympic Park nightmare

As many as 65 residential apartment blocks built for the 2012 Olympic Games are now valued at £0. Our guest, a resident of Stratford’s East Village, explains why.

This is a guest post by Sam Williams. All views expressed are Sam’s own and not necessarily shared by Which?. 

I think ‘helpless’ sums up the feelings of millions of leaseholders up and down the country – we all face an uncertain future due to a change in regulations which led to the creation of the External Wall Survey (EWS1) forms.

People’s experiences have been well documented here on Which? Conversation in the comments.

Leaseholders across East Village, Stratford are no different. East Village, formerly London’s 2012 Olympic Village provided accommodation for around 24,000 athletes during the Olympic Games.

In 2014, the village was transformed to provide residential properties creating 2,818 new homes, including 1,379 affordable homes and houses, for sale and rent.

Of the 1,379 homes made available through affordable housing schemes, almost all leaseholders in East Village purchased a share of a lease through shared ownership or shared equity schemes.

After years of tireless saving, these were the first exciting steps we made onto the property market. Property ownership is seen as an aspiration – all of us leaseholders in East Village thought we were doing the right thing by making a home here.

A living nightmare

But that exciting step has now unravelled into a living nightmare. We are trapped. Prisoners in our own home.

Every building now requires an EWS1 form signed off by qualified professionals, of which there’s a shortage, to allow them to move on with their lives. Be that selling their share of their lease, staircasing to increase their share, or remortgaging to a more competitive rate.

All of this came to an abrupt halt when the EWS1 process was introduced.

Fraud warning: scammers hijack EWS1 process with fake forms

There are 65 residential apartment blocks across East Village, of which 25 blocks contain leaseholders. Every single one of these blocks will require an EWS1 approval before people can move on with their lives. Leaseholders across these 25 blocks continue to wait for intrusive external wall surveys to take place.

Even once the survey is complete, it could just be the beginning – if defects are found then remediation must take place which, depending on the scale, could trap us for many more years.

Across East Village, leaseholders are waiting for updates in the knowledge that at any moment we may receive the letter that confirms our worst nightmare: being liable for 100% of the costs of the remediaton where our freeholders are unable to recover those costs through warranties, the courts or insurance.

For somebody that owns a 25% share of a 125-year lease, that is truly scandalous. 

ACM cladding

This is set against the backdrop that 11 of the blocks here contain Aluminium Composite Material (ACM) cladding – the same cladding that contributed to the Grenfell tragedy.

Three years on from the disaster, it’s still yet to be removed.

Residents here in East Village didn’t construct these buildings. We didn’t sign them off as safe, and we don’t own the external walls, yet, like so many others, we face being billed to make them safe.

We are desperate, and a solution must be found to allow us to move on with our lives. 

This was a guest post by Sam Williams. All views expressed were Sam’s own and not necessarily shared by Which?. 

Comments
Eloise says:
5 October 2020

I am also affected by this. It’s an appalling situation and unfortunately government is doing nothing to support us. My building is under 18 m so not eligible for government funding. No idea how much it will cost to fix the multiple problems. Can’t move, can’t sell, can’t remortgage, can’t sublet.

Another ‘Govt inspired cockup-
heart breaking for those involved.

Arthur Gilbert says:
8 October 2020

idea was sound – reuse buildings. Doesn’t matter what government is in power (national or local), they depend on the civil servants, etc. and so called professional people employed to deliver. 40 years in construction (now retired) I have witnessed changes and a reduction in competence. Too many want to be managers not doers, reduced checking, introduction of self certification/checking, too much trying to offload responsibilities to others, etc. I was gobsmacked re Grenfell. I was under the mistaken belief that we had the most robust fire regulations, testing systems, etc. almost anywhere. Didn’t I read that the cladding was unsuitable for buildings over 10m tall. How did someone miss that basic fact – you don’t have to be an expert to understand that one. Unless someone in whatever government directly intervenes/overrules/etc. then it is the people they rely on who have failed. We are all too quick to blame the government/council of the day whilst the real culprits quietly fade into the background.

First action should be everybody write to their M.P . Get the local paper involved give them a copy of letters.
Write to the Prime Minister and the Mayor of London copy of letters again.
Try to get local T.V and Radio coverage of your plight .
Make it a continuing priority to constantly air your case and bring pressure .
Get a ‘Celebrity ‘ to Champion your case….Gena Miller as experience of the High Court and holding Government to account.
Never give up.

Brendan Mcgowan says:
5 October 2020

If you want to take it to local tv news then email Richard.pollins@itn.co.uk

Patrick Taylor says:
5 October 2020

I seem to recall a mention elsewhere that buildings under 18m are not required to have an EWS1. Presumably on the basis that people will be able to escape easily.

Unfortunately conveyancers are routinely including this question in the Enquiries though it is not relevant. Perhaps Which? Legal could pop-in to confirm this important detail.

Regardless of that the individual lenders may have policies differing on what they lend to. Seems to me that the views of the London Fire Brigade on risks for flats under 18metres may be important. Perhaps a consumer champion could investigate this thread.

Patrick – You are right. The starting height for EWS1 was set at 18 metres because (a) the number of occupants will not be excessive, (b) evacuation will be much easier and quicker, and (c) fire appliances can reach that height for rescuing people and extinguishing fires.

It seems to me that the lending institutions have taken unfair advantage of these regulations in order to limit their exposure at a time of great economic uncertainty. It avoids them having to tell people they don’t want to give them a loan, let them re-mortgage, or help them ‘staircase’ their shared equity to a higher ratio.

Just a thought. A lender who provides a mortgage does so on the basis that they can get their money back if the borrower defaults. Two issues they face with unremedied buildings seem to me to be
1. In the event the building is destroyed by fire, for example, will there be adequate insurance cover to repay the loan. As buildings insurance is the leaseholder’s responsibility to source and finance I wonder how the lender is assured appropriate protection is in place.
2 The value of the property may be seen to be well below its normal market value until remedied, maybe difficult to resell.

I can understand lenders, therefore, being wary of agreeing to loans on what they deem to be particularly risky properties until the cladding and fire protection have been properly assessed.

You are correct that there is no legal requirement for buildings under 18m to undertake an EWS1 inspection. However, lenders have been ‘misuing’ (government’s own words) the form and applying it across the board.

Malcolm – Responsibility for insuring buildings in multiple ownerships rests with the freeholder since they own the structure. The leaseholders pay for the insurance in stated proportions as set out in their leases. The freeholder has to make available a copy of the insurance cover and policy documents for scrutiny by the leaseholders since it is they whose accommodation is at risk if the cover is inadequate or the premium not paid.

On purchase of a leasehold property the insurance cover is one of the essential documents provided to the purchaser in the leasehold pack and a copy will be supplied to the lender’s legal team for their approval before a mortgage is granted.

The affect on property valuations is one of the very unfortunate implications of this EWS1 situation. My view is that only the government can remove this obstacle but there seems to be a reluctance to do so. Maybe this is not something that exercises the minds of many of the government’s supporters although I would have thought a large number of them have bought leasehold flats to let and could be worried about their position.

Malcolm – It is the freeholders who are responsible for insuring the building as it is they who own the structure. The leaseholders pay the cost of the insurance cover in the proportions set out in the lease. The policy conditions and cover provided must be made available for the leaseholders to inspect.

When a leasehold property is sold the freeholder provides a ‘leasehold pack’ which includes the insurance certificate and policy summary; if the purchaser is getting a mortgage these documents will be passed to the lender’s legal team for approval before the mortgage is granted.

John, my slip. I meant the freeholder is the one who insures the building. Thanks for putting that right.

Lesley Robinson says:
5 October 2020

Was none of this apparent when you bought the flats?

Steph says:
5 October 2020

Well of course it wasn’t as that was pre-Grenfell, when the cladding was signed off as safe and there were no building issues

Most of the properties affected by the indiscriminate restriction on lending are low-rise buildings of standard [conventional and fireproof] construction, many of them being eighty years or more old.

None of these issues were apparent because, as Steph says, regulations were changed post-Grenfell.

John – that’s not completely accurate – this situation is affecting pretty much every multi-dwelling block of flats built prior to 2018, including high, medium and low rises. Zenith Close is a good example:

https://15zenith.co.uk/

The Building Safety Fund for buildings over 18m doesn’t go far enough and is over-subscribed already, while for under 18m it’s non-existent:

https://metro.co.uk/2020/10/05/flat-owners-face-30000-bill-each-to-replace-cladding-after-grenfell-disaster-13368462/

Many of these buildings were built in the last 10 years alone.

I may have missed this, but what are the legal responsibilities of the leaseholder when
1. a building is defective due to non-compliance with approved plans, as would appear to be the case with the zenith example ( and, in turn, the developer)
2. a building met the requirements extant at the time but now fails an important safety requirement.

Are there not test cases that could be heard quickly to set the precedent where the answer should be clear cut?

Even when (if) that is resolved to clear the way forward for many blocks then the major problem left for most owners will be the time it will take to complete an inspection, and then the completion of the remedial works. Until then it is understandable a lender will be loathe to risk their (our) money. I cannot see an easy way out of this.

But one issue ought to be capable of swift resolution, and that is to separate out all those apparently compliant properties that are caught up in the mess. Surely, if effort were concentrated on those where a quick inspection would reveal whether they or not they had a problem we could make real progress.

The answers to those questions are taking years, which has led to the impasse from all sides. There are no test cases or clear cut scenarios unfortunately. I’ll email you some further reading.

@gmartin, thank George. Got the email. I’ll look at the links you provided.

Yes, George – That was the point I was trying to make. But my guess is that the vast majority of leasehold flats are pre-1960. There are few tower blocks outside major cities and most of those are owned by local authorities or social housing providers and tenanted directly – relatively few of the flats in such blocks have been subject to the right-to-buy provisions. The financial impact of the EWS1 situation falls almost entirely on leaseholders, and all leaseholders of flats are affected to some extent.

The over-riding priority must be to deal with the high blocks and most urgent blocks first whether they be directly tenanted, or owner-occupied, or sub-let by leaseholders to tenants. For the financial sector to have allowed a situation to develop whereby that intention has been compromised by extending the External Wall Survey requirement to every multi-dwelling block is deplorable and unnecessary and is causing severe personal, social and potential financial problems for hundreds of thousands of leaseholders. It is also taking resources away from the most urgent remedial work if low-rise or unaffected buildings jump the queue for inspection.

The leaseholders of high-rise flats that were badly built in the first place, or have had extensive alterations that have compromised their original safety, are in a serious and desperate situation that the government must address. Most of the low-rise leasehold flats throughout the country are well-built and safe but, unfortunately, the leaseholders are nevertheless subjected to the prevailing uncertainty and potential hardship for no good reason. This was entirely avoidable and the financial sector must be held accountable for that misery.