Revealed: the five major costs the cladding crisis is piling on homeowners

Flat owners across the country have been shaken by the building safety crisis, with large bills piling up on their doorsteps.

So far the debate has been focused on the final bills leaseholders could face for remediation involving the removal of unsafe cladding, but the true costs of the scandal go much deeper.

Talking to leaseholders across the country, we've identified five ways the scandal is wrecking their finances: survey costs, waking watch fees, fire alarm installation and insurance premiums, all followed by the remediation bill.

Here, Which? explores the scandal's five areas of financial fallout and hear from leaseholders who have been forced to deal with them.

1. Fire safety forms

For many, the road to possible financial ruin starts with a simple form with a boring name: an EWS1.

After the tragic Grenfell fire, mortgage lenders required new safety checks for flats before they could be sold. If they pass, they get a good EWS1 rating. If they fail, leaseholders can't sell, so they can't move out.

Since they can be crucial to the sales process, EWS1 forms are in high demand and, as this is a new process and every building is different, there are no set pricing guidelines for the survey, meaning companies can quote wildly different figures to carry out the work.

The demand combined with this being a new, unfamiliar process has been high enough to outstrip the supply of qualified examiners and leave a gap for fraudsters to move in.

Which? has found evidence of scammers signing off EWS1 certificates using fake signatures of chartered surveyors who didn't do the work and had no idea their names were being used.

On top of this, we've heard of lengthy waits to secure these certificates, slowing down or even derailing house sales.

The government says newly published guidance will mean 500,000 leaseholders will no longer need EWS1 forms to sell, but we're yet to see whether it has the desired effect.

The Ministry of Housing, Communities and Local Government (MHCLG) told Which? it 'has also provided nearly £700,000 in funding to the Royal Institute of Chartered Surveyors to train more surveyors', in a bid to speed up the process for leaseholders that require the EWS1 form. It says 500 surveyors are enrolled in the training so far.

A leaseholder we spoke to, Deepa Mistry-Longley, has waited months for an EWS1, and as a result, her growing family is crammed into a two-bedroom flat.

• Find out more: scammers hijack EWS1 process with fake cladding inspection forms

Listen: we hear from leaseholders, campaigners and building safety experts on the Which? Money Podcast's special cladding scandal investigation.

2. Waking watch costs

When your building gets a bad EWS1 rating, what happens next? Often, you'll be required to install a 'waking watch' immediately, wherein wardens patrol common areas 24 hours a day for signs of fire.

Waking watches can be hugely expensive, and the costs are often passed onto leaseholders at short notice without consultation.

In December 2020, leaseholders from four developments we spoke to had already paid £906,500 for waking watches between them.

There are 590 waking watches in London buildings alone. The exact figure for the rest of the country is unknown, but the Daily Mail has reported there are as many as 1,200.

There is currently no government funding to pay for waking watches, although MHCLG disputes this. It says it is 'providing £30m to reduce or remove the need for waking watches for the highest risk buildings with unsafe cladding in England.'

• Find out more: homeowners pay millions for 24-hour fire patrols

3. Installing fire alarms

Another consequence of living in an unsafe building is having to pay for a new, better fire alarm system. Sometimes, installing one will end the need for a waking watch. But not always.

In February 2021, leaseholders from 12 buildings showed us the quotes they were given for fire alarms. On average, each building was facing a £127,000 bill.

The government has a £30m fund to pay for fire alarms in buildings over 18 metres tall with waking watches installed.

MCHLG told Which? that £22m of this funding 'has been allocated to the eight metropolitan areas estimated to have the largest number of eligible buildings across England' with the remaining funds being distributed by the department to 'private sector buildings in other areas and to eligible buildings in the social sector.'

If our average is representative, that would cover 236 buildings - less than half of the 590 buildings with waking watches in London alone.

4. Soaring buildings insurance costs

Once your building has been declared unsafe, you could be in for a shock when it comes to renewing your buildings insurance.

In January 2021, we found that leaseholders from 16 apartment blocks were paying an average of 500% more in buildings insurance than they were before safety issues were identified.

Since insurance is handled by a building's freeholder, leaseholders have no say in choosing premiums, even though the costs are passed onto them through service charges.

There is no government support to pay for these skyrocketing insurance premiums, and for many, they are proving unaffordable.

Aileen Williams of The Landmark, Bexhill-on-Sea, has seen her service charges double to pay for cladding-related costs, including increased buildings insurance. 'When [the bill] came through, our worst fears were realised,' she told Which? Money. 'Many people in the building just aren't going to be able to pay double the service charges.'

• Find out more: insurance bills rise by more than 1,000% for unsafe flats

5. Sky-high remediation bills

This is the bill that's meant to make it all better. Fix your building's problems and you won't need a waking watch, you'll pass a safety check and you can move out.

Sadly, it takes a long time for remediation bills to come through, meaning many leaseholders will have been financially crippled by the four areas mentioned above by the time they arrive.

Even more worryingly, we've heard from leaseholders who are facing remediation bills of up to £100,000 each - an amount no one can be expected to afford. And if leaseholders don't pay, they could be evicted.

The government has provided £5bn funding to help with remediation, but it comes with several caveats:

• it's only available in England
• it's unclear whether it covers non-cladding safety issues, such as missing cavity barriers
• only buildings over 18 metres are eligible

If you live in an affected building under 18 metres but over four storeys, you may be able to apply for an upcoming government financing scheme, which will pay to remove cladding, but you will have to pay this back at a rate of up to £50 a month.

The full details of this scheme haven't been announced, and there are questions over how an annual £600 bill could affect impact the mortgage affordability for borrowers looking to buy affected properties.

Read more leaseholders' stories:

• 'We can't afford £100,000 each to make our buildings safe'
• 'My EWS1 Olympic Park nightmare'
• 'My entire life has been changed by combustible cladding'
• 'We've been told our cladding bill could be £13,000,000'

This article was updated on 12 March with additional comment from the Ministry for Housing, Communities and Local Government. We have also corrected an error in the allocation of Waking Watch Relief funding for eligible buildings.