RICS response to Secretary of State announcement on EWS and PII

The announcement of guaranteed funding for the removal of dangerous cladding in all properties over 18m will also provide welcome relief to leaseholders, provide greater clarity and confidence to the housing market. Upfront funding is something RICS have long called for, and we welcome this announcement. Government intervention in the costs of remediation of dangerous cladding to sub-18m blocks is to be welcomed. We recognise the complexity of the funding mechanisms, however, it is critical that any scheme should be affordable and viable.

The lack of affordable professional indemnity insurance (PII) is a very serious problem affecting many professions at this time, creating real world difficulties for consumers. It is especially acute for professionals, such as chartered surveyors, who work in the built environment and are potentially exposed to fire safety related insurance claims.

RICS has been working intensively with the Government and the insurance industry to highlight the problem and press for a solution. The Government's firm commitment to intervene in the insurance market, through a Government backed PII product is to be welcomed and will, no doubt, increase the number of professionals able to complete external wall assessments, relieving the bottlenecks that currently exist . 

It will mean that the chartered surveying professionals we are upskilling to complete EWS1 forms, creating additional capacity in the market through the EWS assessment training programme, have surety that they will be able to gain PII. This will be welcome news to leaseholders and homebuyers. We will continue to work with all parties to ensure the commitment is delivered on, urgently. 

Alongside today's announcements, our planned guidance note on the valuation of properties in multi storey residential apartment buildings, is currently in the final stage of development, following the recent consultation. The guidance should help further, as it will support greater consistency among valuers and their lender clients for when an EWS1 form is required, reducing the number of unnecessary delays. We call on lenders, insurers and fire safety bodies to support the guidance when it is issued.

Update - 20 October 2023

The Government backed External Wall System (EWS1) Professional Indemnity Insurance (PII) Scheme, which launched in September 2022, will close on 30 October 2023. 

The Scheme was intended to be a short-term solution for assessors who were unable to purchase suitable professional indemnity insurance to conduct EWS1 surveys. The lack of appropriate insurance cover meant that EWS1 forms were difficult to obtain, and leaseholders in turn could not re-mortgage, buy, or sell their homes without an EWS1 form.  

Government action has helped to address this market failure. The relevance of EWS1 forms is declining as wider Government interventions have taken effect that support lenders to use other forms of documentation to support commercial lending decisions. Govt research shows insurers are offering professional indemnity insurance for EWS1 work and that assessors can access suitable insurance from the open market at a competitive premium and with a wider scope of coverage. The market has responded to the protection gap the Government was looking to address, which removes the requirement for the Government backed Scheme and so providing it is no longer a good use of public funds.  

Policies sold under the Scheme to date will continue to be insured under the original terms. Quotes obtained up to 30 October will continue to remain valid for 30 days and can be retrieved using the quote reference.  

For more information, please contact MGAM at EWS1help@MGAMutual.com.

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