Quiz - how well do you understand your lease?
Understand the key things you should know about your lease. If you are a purchaser, this can help make sure your solicitor has covered all of these points and explained them clearly to you.
The Royal Institution of Chartered Surveyors (RICS), the Building Societies Association (BSA), and UK Finance have agreed a new process for the valuation of high-rise buildings, called the External Wall Fire Review process (EWFR).
The External Wall Fire Review process is designed to overcome issues that have arisen preventing property owners, in particular leaseholders, from buying, selling or mortgaging their properties.
The process is as follows:
1. Valuer instructed by lender
2. Valuer checks whether building has External Wall System (EWS) Form
3. If yes – valuer acts depending on Form content
4. If no – the following process starts:
Download the flowchart here
RICS Guidance Options A and B is as follows:
- Option A
Option A will be completed where the building does not contain materials likely to support combustion or does contain materials likely to support combustion, but ONLY to an addition (such as a balcony).
A1 and A2 are not likely to lead to any further action but you should refer to lender guidance and always reflect in your valuation where necessary. A3 will be completed where there are combustible materials but only to an addition, such as a balcony. Where A3 is highlighted by the fire expert, you should refer to lender guidance or ask for the cost of remedial works and reflect in your valuation. Balconies of combustible materials have been confirmed to represent a fire risk but the cost of remediation is considered to be lower than external wall systems. Therefore lender guidance may require a different action, such as retention of a set amount. Where lender guidance does not exist, or lender guidance does not adequately reflect the impact on value, you should request details of remediation costs and reflect in your valuation.
- Option B
Option B is where there are known combustible materials in the external wall system. B1 is where there are combustible materials but, in the opinion of the fire expert, works are not required; this will be because other mitigating circumstances exist.
B1 is not likely to lead to further action but you should refer to lender guidance and reflect in your valuation where necessary.
Option B2 is where works are required. You should obtain the cost of remediation works, refer to lender guidance and reflect in your valuation.
Where RICS Members request further information about the external wall system or an addition, such as a balcony, RICS Members must have sight of the EWS form and ensure its content is adequately recorded for future reference, together with full reasoning for the valuation advice given.
This will not only ensure the context of the valuation advice is understood but also mean that adequate records are available in the event of a future query.
The content of this article does not constitute legal advice and is provided for general information purposes only.