Live: Lenders reveal standpoint on new cladding guidance
Live: The Royal Institute of Chartered Surveyors (RICS) implemented new cladding guidance on 5 April which clarified what types of properties will, and will not, require additional inspections due to concerns about fire safety.
It is currently estimated that there are two million mortgage prisoners in the UK as a result of the cladding crisis, in addition to 600,000 people currently living in high-rise buildings with dangerous cladding.
According to the latest government statistics, just 53% of high-rise buildings known to have highly flammable aluminium composite material (ACM) cladding have completed remediation.
ACM cladding was the type of cladding responsible for the Grenfell Tower disaster in June 2017.
The External Wall Fire Review (EWS) process, and resulting EWS1 form, is a set way for a building owner to confirm that an external wall system on residential buildings has been assessed for safety by a suitable expert, in line with government guidance.
Mortgage Introducer has spoken to key lenders to find out what their next steps are in taking the new cladding guidance into account, and will be providing live updates of their responses below.
Leeds Building Society
Leeds Building Society has confirmed it has adopted the RICS guidance into its own valuer instructions, in conjunction with Countrywide, which manages valuers on its panel.
Yorkshire Building Society
Yorkshire Building Society is implementing RICS updated cladding guidance for properties it lends on, which it believes provides useful direction and enables flexibility.
A spokesperson for Yorkshire Building Society, said: “We take a common-sense approach to valuation and our lending policy remains the same.
“We will continue to rely upon our valuers to decide when they feel an EWS1 form would be appropriate, so that they can avoid asking for them unnecessarily, whilst also not passing responsibility for any significant fire risks on to potential purchasers who might not be aware of the full extent of the risks.”
TSB has welcomed the updated RICS cladding guidance as it believes it will create greater consistency across the valuer industry.
A spokesperson for TSB, said: “TSB’s requirements will not change as we are in line with RICS guidance already.
“However, we are supportive of the new guidelines as it will mean greater consistency across the valuer industry.”
Read the full story from TSB here.
Santander is hopeful that updated guidance from RICS will speed up processes for cladding prisoners.
A spokesperson for Santander, said: “We hope to see the updated guidance reduce the number of requests for further information on cladding made by valuers before providing a mortgage valuation.
“Cladding does not impact an existing mortgage customer’s ability to complete a product transfer with us and move to a new mortgage rate when they are not taking on any additional borrowing, or changing the mortgage term.”
Read the full story from Santander here.
Nationwide has said the updated RICS guidance on cladding provides clarity and reassurance to thousands of homeowners and tenants across the UK living in properties impacted by cladding and fire safety issues.
A spokesperson for Nationwide, said: “Our lending approach is very much in line with this guidance although there will be occasional instances where, as a responsible lender we still require an EWS1 form.
“We have a duty of care to protect all our borrowers and ensure properties we are lending on are safe for those that reside in them.”
Read the full story from Nationwide here.
Lloyds Bank said it continues to actively lend on flats in buildings with cladding whilst taking a risk-based approach and said it hopes guidance from RICS will encourage other lenders to do the same.
A spokesperson for Lloyds Bank, said: “We welcome RICS’ guidelines which should provide much-needed clarity and consistency for lenders, surveyors and homeowners.”
Read the full story from Lloyds Bank here.
The Co-operative Bank
The Co-operative Bank has confirmed that it will be following the updated RICS cladding guidance, and it is working with its valuer panel to update its processes accordingly.
Hinckley & Rugby Building Society
Hinckley & Rugby Building Society has implemented the guidance and it is satisfied it provides greater clarity for valuers and lenders.
Sarah Johnson, head of underwriting at Hinckley & Rugby Building Society, said: “As a society, we have joined the majority of the industry and implemented the RICS guidance on cladding and the requirement of EWS1 forms.
“We are satisfied that the guidance creates clarity for valuers and lenders and, importantly, helps to make the buying process less cumbersome and more efficient for consumers.”
Skipton Building Society
Skipton Building Society has confirmed the implementation of the updated RICS cladding guidance.
The lender’s valuer’s guidance notes have been renewed and processes have been amended to support the new EWS1 requirements.
Nottingham Building Society
Nottingham Building Society has confirmed that in conjunction with Gateway, who manages its panel valuers, it is adopting the RICS guidance.
The Nottingham will continue to rely on the valuers to update them where they feel an EWS1 form would be appropriate.
Newbury Building Society
Newbury Building Society has detailed that it will rely on the valuer to advise whether or not an EWS1 form is required and this decision will be based on the RICS guidance.
A spokesperson for Newbury Building Society, said: “Please note that we do not lend on flats above 6 storeys, but an EWS1 form may still be required where the block is below this number, subject to the valuer’s comments.”
Metro Bank has confirmed that has it always followed the Ministry of Housing, Communities and Local Government (MHCLG) guidelines.
As such, the updated RICS guidance is in line with the MHCLG guidelines.
A spokesperson for Metro Bank, said: “With regard to EWS1 forms and properties identified as having external wall cladding, we closely follow the latest MHCLG guidelines.”
Cambridge Building Society
Cambridge Building Society intends to follow the updated RICS guidance and believes it provides transparency for the market.
Tracy Simpson, head of lending at Cambridge Building Society, said: “It is our intention to follow this guidance. We’re hoping this updated guidance brings greater clarity and consistency”.
Newcastle Building Society
Newcastle Building Society has expressed its support for the guidance and intends to update its procedures in line with it.
A spokesperson for Newcastle Building Society, said: “We’re supportive of the changes announced and are working with our property risk partner e.surv, to update our processes accordingly.”
Aldermore Bank has expressed its support for the updated cladding guidance and has confirmed its adoption of the recommendation.
A spokesperson for Aldermore Bank, said: “We rely on the expertise of our valuers to highlight any potential issues with a property and are supportive of the new guidance from RICS, which we’re adopting as part of our processes.
“We’ve recently updated our guidance note to valuers to confirm that EWS1 forms should be requested in line with the RICS guidance on valuation of properties in multi-storey, multi-occupancy residential buildings with cladding.”
Paragon Banking Group
Paragon Banking Group has confirmed its support for the guidance and welcomes the clarity it provides.
Neil Smith, head of surveyors at Paragon, said: “Through our team of in-house surveyors we have extensive expertise in assessing a wide range of property types and we manage our exposure to flats in high rise blocks closely.
“We promote the use of our suitability referral process which enables us to consider any potential issues relating to cladding or any other matters prior to formal mortgage applications.”
Principality Building Society
Principality Building Society will follow the updated RICS guidance in both its retail lending and commercial lending decisions.
Vicky Wales, chief customer officer at Principality Building Society, said: “We stand behind the progress made on the new RICS guidance and we are following this guidance in both our retail lending and commercial lending decisions, through valuers and project monitors.
“We are hopeful this will provide greater assurance to home owners and residents.’’