By Eric Curran - Managing Partner, DM Hall
The Grenfell Tower tragedy horrified Britain, and our legislators – quite rightly and commendably – have concentrated their minds on putting in place new rules and regulations which will ensure that such appalling misery is never allowed to occur again.
But, as is so often the case, hasty responses are not necessarily the right responses and I am genuinely concerned that an intolerable situation is developing which has the potential to create a whole new set of victims – this time financial ones.
The issue stems from Housing Ministry advice covering the fire safety of external wall systems in which the seller is obliged to confirm whether or not the building has potentially flammable cladding and whether there is an active management plan in place.
This creates a dilemma for Chartered Surveyors who are neither skilled nor equipped to rule on these matters simply by carrying out a visual inspection. If clarity on the subject is unavailable, they have no choice in England and Wales but to apply a nil value to the property.
In Scotland, the now tried and tested regime of Home Reports means that surveyors can propose a value with the caveat in the report that the matter of cladding is Category 3, meaning that it must be addressed immediately.
The effect in both cases is the same – surveyors cannot value comprehensively until the paperwork covering the technical specification for the cladding is provided. If it cannot be provided, the property is blighted, with the knock-on effect of people not being able to sell.
What does the Government suggest property owners should do in these circumstances? Well, in its advice note it provides a list of Chartered Professionals from whom property owners can seek a statement that the cladding meets all current legislative requirements and is fire safe.
It is a long list, ranging from architects, inspectors and building engineers through to clerks of works, fire engineers, building control, town planners and façade engineers.
There is only one problem. We have spoken to many – though by no means all – of the bodies on the list and the unanimous response has been, to paraphrase: “We’re not doing the testing.” There also appears to be a reluctance to adopt the risk or liability that comes with any advice provided.
Sellers are being pushed into a Catch-22 situation where they need a qualified professional to confirm compliance before they can sell but, post-Grenfell, the listed professionals have little incentive to approve cladding – or insulation and fixings – without knowing what the future may hold.
Zero valuations and consequent blight are causing increasing concern among brokers, particularly in London. To complicate matters in Scotland the Government, which has adopted the UK advice wholesale, is to introduce legislation on the use of cladding for new build property from 18 metres, approximately six storeys, to 11 metres, approximately four storeys.
This will potentially bring a whole new portfolio of properties into the firing line. Holyrood is also adding balconies to components of the building which will now have to be checked to see if they contain combustible material.
Lenders, too have taken the advice on board in its most literal form and are increasingly adamant that, for mortgage purposes, zero value will be the bottom line unless the compliance confirmation is forthcoming. The onus is on the seller.
Chartered Surveyors, at the coal face in this complex situation, find themselves in the uncomfortable position of reporting cladding issues using different criteria, since no official guidance has been issued.
As professionals, they are straining every sinew to find a solution and, while they cannot provide advice, they can expertly advise and interpret once the relevant information is in their possession.
PI insurers have also been running for the hills since Grenfell, adding onerous exclusion clauses to developers and constructors. If these exclusion clauses are extended to the survey and valuation sector of the profession, the valuation of properties with cladding may well grind to a halt.
As I suggested at the start, I am sure the guidance was proposed with the best of intentions, but in practical terms it is ill-conceived, ill-considered and increasingly difficult to implement. It is time to revisit it before any more lives are ruined.