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Leaseholders in blocks of flats under 18 metres with cladding should be supported to buy, sell or re-mortgage their homes after the government agreed with major lenders to "pave the way to ending the need for EWS1 forms."
It comes following expert advice that the forms should no longer be needed on buildings below 18 metres.
Housing Secretary Robert Jenrick made the announcment after new advice from fire safety experts, which makes clear that there is no systemic risk of fire in these blocks of flats.
The report recommends that residents are reassured as to safety, and a more proportionate approach is urgently instituted, requiring action by all market participants.
A group of major high street lenders has "committed to review their practices" following the new advice; HSBC UK, Barclays, Lloyds Banking Group and others have said that the expert report and government statement paves the way for EWS1 forms to no longer be required for buildings below 18 metres.
It states that fire risks should be managed wherever possible through measures such as alarm systems or sprinklers, and that the overwhelming majority of medium and low- rise buildings (those under 18m) with cladding should not require expensive remediation.
The move has been backed by the National Fire Chiefs Council and the Institution of Fire Engineers.
Housing Secretary Robert Jenrick said: "Today’s announcement is a significant step forward for leaseholders in medium and lower-rise buildings who have faced difficulty in selling, anxiety at the potential cost of remediation and concern at the safety of their homes.
"While we are strengthening the overall regulatory system, leaseholders cannot remain stuck in homes they cannot sell because of excessive industry caution, nor should they feel that they are living in homes that are unsafe, when the evidence demonstrates otherwise.
"That’s why I commissioned an expert group to further examine the issue, and have already agreed with many major lenders that lower-rise buildings will no longer need an EWS1 form, and the presumption should be that these homes can be bought and sold as normal.
"We hope that this intervention will help restore balance to the market and provide reassurance for existing and aspiring homeowners alike. The government has made its position very clear and I urge the rest of the market to show leadership and endorse this propionate, evidence based, safety approach."
Dame Judith Hackitt said: "I am pleased to see the support and commitment to returning to an evidence-based proportionate approach to fire and building safety. It’s critical, given the significant - and in many cases unnecessary - impact this is having on people who live in and own homes in blocks of flats.
"What’s needed now is for the remaining bodies and lenders to get onboard so we have a collective, fact-based system that is reflective of the reality of the situation and reassures leaseholders that they, their homes and their investments are safe."
CEO of the Institution of Fire Engineers, Steve Hamm, said: "The IFE supports the expert statement issued today. We expect this will lead to a significant reduction in the demand for the EWS1 process from mortgage valuers, particularly for buildings under 18m in height.
"Today’s statement will support competent fire engineers to use their professional training, judgement and expertise to assess buildings based on professional appraisal of risk. This should enable a move away from the often risk-averse and overly cautious approach that has been seen in many cases.
"We welcome the commitment of all parties to ensure a proportionate and evidence-based approach to fire and building safety for all buildings along with the increased scrutiny to be provided by the new Regulators and the gateway approval process, which we expect will lead to improved levels of safety, providing comfort and reassurance for residents and homeowners as well as the wider market."
Chair of the National Fire Chiefs Council (NFCC), Mark Hardingham said: "We fully support this new advice and welcome the challenge to those who are applying an overly risk-averse approach in many buildings below 18 metres.
"We expect this will start to redress the balance where disproportionate measures have been put in place to manage fire risks. We want to ensure that buildings are safe and will work closely with fire and rescue services to apply the advice for buildings in their area."