Government tells developers: “We are coming for you”.

Housing Secretary Michael Gove came out all guns blazing yesterday, with his sights firmly set on housing developers who he says are responsible for safety problems caused by cladding on buildings.

In a no-holds barred statement, he vowed to “expose and pursue” firms in order to get them to pay for cladding removal from lower height buildings (between 11 and 18.5 metres high).

This pledge will ease the “unfair burden” placed on leaseholders by issues exposed by the Grenfell fire in 2017 which killed 72 people. The Government set out measures aimed at securing up to £4bn from developers towards the costs of remedial work needed to make buildings safe.

Unsurprisingly, developers have hit back at this claiming it is unfair to expect them to shoulder the burden this cost on their own and that the building safety regulator and manufacturers of cladding materials should also be held responsible. Quoted in the Financial Times, Matthew Pratt, CEO of Redrow said: “There’s still too much ambiguity and we would love the government to clarify what’s going on,”

The Home Builders Federation responded: “Leaseholders should not have to pay for remediation of buildings and the previously proposed loan scheme has proved to be impractical. But developers have already set aside hundreds of millions to fix properties and the government is raising a further £2bn via a targeted tax on the industry over the next 10 years.

“Whilst housebuilders are committed to playing their part, there are many other organisations involved in the construction of affected buildings, including housing associations and local authorities as well as developers and government. Other parties should be involved in remediation costs, not least material manufacturers who designed, tested and sold materials that developers purchased in good faith that were later proved to not be fit for purpose.”

In a statement to MPs, Mr Gove’s said that taxpayers should not be forced to pay more money for building defects like the removal of cladding. Changes to make it easier for owners to sell their homes were also unveiled. His plan is to set up a roundtable with builders to allow them to “do the right thing” by the end of March but if that does not lead to a solution then he has promised to “impose a solution upon them in law”. He has threatened to restrict access to government funds and future procurement if they fail to act.

The secretary of state’s announcement has been given a cautious welcome by leaseholders. However, there are still people who will not be able to access any support to remove cladding and Labour called for leaseholders to be “fully protected I law from the costs of fixing all historic defects”.

Kate Henderson, Chief Executive of the National Housing Federation, said: “We agree that those responsible – developers, contractors and manufacturers – should make a major contribution to funding the remediation needed. Innocent leaseholders should not have to pay for building safety issues created by the big building firms. 

In the absence of funding, charitable housing associations have been left to pick up the bill. These not-for-profit organisations already estimate they will spend £10bn – over double the sum being talked about today – on remediating homes where social renters live, impacting their ability to build more social housing and improve existing properties.”

The stock market responded negatively to the news, with the value of UK housebuilders falling by around £1bn in early trading. Persimmon’s value fell by more than £300 million alone.

Chris Seeley, Director at ARK, commented: “One thing to note is that the Government statement talks about people who ‘own flats’ not having to pay a penny to fix unsafe cladding. But where does this leave housing association or councils who operate shared ownership schemes? Does this leave them in the firing line to pick up these costs?”

Further government proposals aimed at fixing a “broken” building safety system include:

  • New advice for assessing property safety and scrapping the “wrongly interpreted” consolidated advice notice
  • A pledge that no leaseholder in a building above 11m will ever face any costs for fixing dangerous cladding
  • A £27m fund to pay for fire alarms and sprinklers to end so-called waking watches

Statutory legal protections for leaseholders will be introduced and Mr Gove will pledge “nothing will be off the table”.

He will declare medium sized buildings are safe unless there is evidence to the contrary and pledge to restore a more “common sense” approach to assessing building safety.

The consolidated advice notice – which many have complained makes it difficult to sell homes unless they can prove a perfect bill of health – is being withdrawn immediately.

Mr Gove will say the notices which the current government introduced, have been wrongly interpreted and and go beyond “what is necessary”.

New guidance for assessors will be published in the coming days.