Enabling flat sales in high-rise buildings

The Government Actuary’s Department (GAD) has supported the UK Government by helping to develop an insurance scheme for high-rise building assessments to enable the sales of flats in high-rise buildings.

Scheme development

Following the Grenfell fire in 2017, mortgage lenders became reluctant to lend to buyers of flats in high-rise buildings. There was concern that these flats wouldn’t represent good security and that owners could be liable for remediation costs. Without any assessment of the external wall system, some properties were given zero valuations, rendering them unsellable and un-mortgageable.

To provide assurance, an External Wall System (EWS1) assessment process was introduced in December 2019 following consultation, as an industry-wide solution for property owners wanting to sell their home or re-mortgage (as well as to ensure their home is safe). 

The form provides clarity about the materials used in any external wall system and enables lenders and prospective purchasers to make informed decisions, whilst ensuring that defective materials are identified.

An EWS1 assessment is undertaken by a qualified professional to indicate whether remediation work, such as removal of cladding, is needed on a high-rise building. However, many qualified professionals found they could not obtain professional indemnity insurance to cover their assessments.

02 Aug 2021
FAQs: EWS1 Forms

In 2019, mortgage lenders across the UK began to seek assurance on the safety of external wall systems as a condition of approving applications. In recent years there has been concern that flats in high-rise blocks wouldn’t represent good security and that owners could be liable for remediation costs.

The Department for Levelling Up, Housing and Communities (DLUHC) subsequently announced proposals for a government-backed professional indemnity insurance scheme for EWS1 assessments.

GAD provided extensive support to DLUHC in the design and pricing of the scheme, which was complex. It has been estimated that claim costs will be £100 million, although there is no theoretical cap on the total size of claims that could be made. GAD has also advised DLUHC on the level of premiums needed to recoup the expected claims and operating costs.

Scheme launch

The scheme is set to launch in September 2022, and the UK Government has entered commercial arrangements with a selected insurer who will be administering insurance policies to qualified professionals that will enable the sale of flats in high-rise buildings.