An investor recently planning to buy a Manchester flat was told by their lawyer that the building had a cladding issue and no EWS1 form, so a mortgage could not be arranged. So what exactly is a cladding issue?
The issue traces back to 2017, when the Grenfell Tower fire in London killed 72 people. To prevent a repeat of that tragedy, the government introduced a series of building-safety rules, including a requirement to remove and replace aluminum composite material (ACM) cladding from high-rise residential buildings. That requirement applies to buildings that are at least 18 metres in height OR have at least 7 storeys (whichever threshold is met).
High Remediation Costs
Because the new rules require buildings to be re-clad, they come with construction costs attached. On leasehold properties, ownership of the freehold typically sits with a separate freeholder, so these costs are usually passed on to leaseholders. For example, Citiscape, a building in Croydon completed in 2003, spent £2 million replacing its flammable cladding — an average of £31,300 per household.
450 Buildings Found Non-Compliant
According to figures current as of January 2020, 450 buildings were found non-compliant, 356 of them residential, concentrated mainly in East London and Manchester. Because of planning restrictions, high-rise buildings tend to cluster along rail lines and in city centers — exactly the areas investors favor most. So when buying a secondhand flat, it is worth checking first whether the “Replacement of Flammable Cladding” work has already been carried out. A solicitor also has a duty to disclose this risk to a buyer at the time of purchase. On top of that, neither new nor established banks will generally approve a mortgage on a property with a cladding issue.
How to Avoid the Risk When Buying a New Property
When buying a new-build property, it is best to ask the developer directly whether the building has a fire safety certificate and an EWS1 form. The form must include the full property address and every postcode covered by the development, be dated and signed, and carry the name and qualifications of the assessor. The assessor should be from one of the professional bodies on RICS’s non-exhaustive suggested list (published jointly with UK Finance and the Building Societies Association) — EWS1 is an industry protocol, not a government-approved scheme, and no government department approves assessor bodies (see list below).
Professional Bodies on RICS’s Suggested Assessor List
Architects Registration Board (ARB)
Consultant Registered Approved Inspectors Association (ACAI)
Association for Project Management (APM)
Association for Project Safety (APS)
Chartered Association of Building Engineers (CABE)
Chartered Institute of Architectural Technologists (CIAT)
Chartered Institute of Building (CIOB)
Chartered Institute of Ecology and Environmental Management (CIEEM)
Chartered Institution of Building Services Engineers (CIBSE)
Chartered Institution of Water and Environmental Management (CIWEM)
Construction Industry Council Approved Inspectors Register (CICAIR)
Institute of Clerks of Works and Construction Inspectorate (ICWCI)
Institute of Environmental Management and Assessment (IEMA)
Institution of Civil Engineers (ICE)
Institution of Fire Engineers (IFE)
Institution of Structural Engineers
Local Authority Building Control (LABC)
Royal Institute of British Architects (RIBA)
Royal Institution of Chartered Surveyors (RICS)
Royal Town Planning Institute (RTPI)
Society of Fire Engineers (SFE)
A property with a cladding issue can be difficult to sell, given the high remediation costs and the mortgage restrictions involved, so it is worth checking for this risk before investing.
For help checking a specific building’s cladding and EWS1 status before you buy, ask Zagdim.
Have a question about this guide? Leave a comment below, or ask Zagdim directly.
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