Fire Safety Ratings and their Impact on Mortgages

Home Fire Safety Ratings and their Impact on Mortgages
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Mortgages, Latest News Sunny Avenue
10 Jul 2023

To ensure residential leasehold buildings are safe there are important requirements to follow, both applying to low- and high-rise flats. One requirement is the External Wall System Fire Review, or EWS1 form. This form proves that a property has been assessed for fire risks.

When it comes to the EWS1 form, it's crucial to understand the specific ratings given to these assessments. One rating that keeps popping up and applies to my flat is the B2 fire safety rating. This rating indicates that there are combustible materials in a building's external wall that need attention.

In this insight, I will explain what a B2 fire safety rating means and how it affects mortgages. We will also discuss the steps that major banks have taken to make lending easier for properties with this rating. 


Key Takeaways

  • To ensure residential leasehold buildings are safe, it is important to obtain an External Wall System Fire Review (EWS1) form, which proves that a property has been assessed for fire risks.
  • The B2 fire safety rating indicates the presence of combustible materials in a building's external wall that require attention, but it does not mean the building is unsafe or uninhabitable.
  • When it comes to getting a mortgage, it's important to understand the specific fire safety ratings. Properties with A1, A2, and B1 ratings generally have no significant impact on mortgage availability, as they meet the required safety standards.
  • Properties with A3 and B2 ratings may face challenges in obtaining a mortgage, as remedial works are typically required to address the identified fire risks.

Understanding the B2 Fire Safety Rating

The B2 fire safety rating is like a label given to a building's outer walls after they've been checked by a qualified expert. This rating means there are materials in the walls that can catch fire, so they need to be fixed to reduce the risk. It's important to know that having a B2 rating doesn't mean the building is dangerous or can't be lived in. It just means there are specific things that need to be done to make it safer.

The materials in the outer walls that can catch fire include things like cladding, insulation, fire-stops, and fire barriers. These materials might not meet the standards set by building rules, which say they should be hard to burn. There might also be things attached to the walls, like balconies, that add to the fire risk.

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Implications of Fire Safety Ratings on Mortgages and Lending

In the past, banks were really cautious and didn't want to lend money for properties until all the dangerous materials were completely removed. But things have changed now, and major banks are more flexible when it comes to properties with a B2 fire safety rating.

According to new guidance from UK Finance and the Building Societies Association (BSA), banks like Barclays, HSBC, Lloyds, Nationwide, NatWest, and Santander have agreed to consider lending on properties with a B2 rating if there's a solid plan and enough money to get rid of the dangerous materials. This means that as long as there's a comprehensive plan in place to replace those materials, alongside a set date and a letter from the building developer confirming this, banks are willing to help people get mortgages for these properties.

It's important to remember that different banks might have their own rules and how much risk they're willing to take with properties that have a B2 fire safety rating. That's why it's really important for borrowers to talk to mortgage brokers to get a full range of options from different lenders. 

Differentiating EWS1 Assessments and Fire Risk Assessments

Understanding the B2 fire safety rating requires distinguishing between an EWS1 assessment and a fire risk assessment.

  • EWS1 assesses the external wall system for combustible materials and risks, mainly for sales and mortgages.
  • Fire risk assessments are mandatory for all buildings, assessing broader fire hazards and safety measures.

Both assessments are important but serve different purposes in ensuring overall fire safety.

What Are the Different Fire Safety Rating Classifications?

When it comes to fire safety ratings, there are different classifications that give more detailed information about the assessment results. These classifications help people like leaseholders, potential buyers, and lenders understand the specific risks involved. So, let's take a look at the various classifications for fire safety ratings:

A1 Classification:
  • The main materials in the external wall are hard to burn or meet the limited combustibility criteria.
  • Cavity barriers are properly installed in relevant areas.
  • There are no attachments to the external wall, like balconies, that contain a lot of flammable materials.
  • No implications on Mortgage lending.
A2 Classification:
  • The main materials in the external wall are hard to burn or meet the limited combustibility criteria.
  • Cavity barriers are properly installed in relevant areas.
  • A risk assessment of attachments, like balconies, confirms no additional work is needed.
  • No impact on mortgage lending.
A3 Classification:
  • The main materials in the external wall do not meet the minimum criteria
  • Remedial work is required to be carried out
  • Mortgage lenders will not lend against this property until confirmation of remedial works is provided.
B1 Classification
  • Combustible materials are present in the external wall.
  • The assessed fire risk is sufficiently low, and no remedial works are required according to a Chartered or Incorporated Engineer of the Institution of Fire Engineers (IFE) or an equivalent professional with relevant qualifications.
  • Mortgage lenders will lend against this property.
B2 Classification
  • Combustible materials are present in the external wall.
  • The assessed fire risk is sufficiently high, and remedial works are required.
  • The managing agent or landlord is provided with details of the required remedial and interim measures, which are documented separately and do not form part of the EWS1 form.
  • Mortgage lenders will not lend against this property until remedial work is confirmed with an agreed date.

Fire Safety Classifications

A1

  • The main materials in the external wall are hard to burn or meet the limited combustibility criteria.
  • Cavity barriers are properly installed in relevant areas.
  • There are no attachments to the external wall, like balconies, that contain a lot of flammable materials.
No implications on mortgage lending.

A2

  • The main materials in the external wall are hard to burn or meet the limited combustibility criteria.
  • Cavity barriers are properly installed in relevant areas.
  • A risk assessment of attachments, like balconies, confirms no additional work is needed.
No impact on mortgage lending.

A3

  • The main materials in the external wall do not meet the minimum criteria.
  • Remedial work is required to be carried out.
Mortgage lenders will not lend against this property until confirmation of remedial works is provided.

B1

  • Combustible materials are present in the external wall.
  • The assessed fire risk is sufficiently low, and no remedial works are required.
Mortgage lenders will lend against this property.

B2

  • Combustible materials are present in the external wall.
  • The assessed fire risk is sufficiently high, and remedial works are required.
Mortgage lenders will not lend against this property until remedial work is confirmed with an agreed date.

When Do You Need an ESW1 Form?

if your residential building is either over six storeys or 18m tall and has external cladding or a timber balcony, then you'll need an EWS1 form.

The rules about which buildings require an assessment actually changed in 2021. RICS (in partnership with the government) has released a report with detailed information and a decision tree to help determine if a specific building needs an assessment.

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Fire Safety Ratings and Mortgages

When it comes to fire safety ratings and mortgages, there's good news and bad news. The good news is that some lenders have started to lend money for properties with A3 and B2 ratings. However, the bad news is that it requires having an agreed date for the remedial works to be completed, and that is something that is mostly beyond your control.

If you find yourself in this situation, it's best to seek advice from the freeholder of the property, your agent or mortgage adviser, depending on whether you are the buyer or seller of the property. 

ABOUT THIS AUTHOR - STUART CRISPE

Stuart is an expert in Property, Money, Banking & Finance, having worked in retail and investment banking for 10+ years before founding Sunny Avenue. Stuart has spent his career studying finance. He holds qualifications in financial studies, mortgage advice & practice, banking operations, dealing & financial markets, derivatives, securities & investments.

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