Gove seeks ‘just deal for industry, leaseholders and the taxpayer’

London skyline high rise buildings with cladding

The housing secretary, Michael Gove, has confirmed that firms have until March to agree how they will help leaseholders living in buildings higher than 11 metres. Those living in the buildings that are around four to six storeys high will no longer face costs for replacing dangerous cladding. The government’s plan to offer loans and long term debt for medium rise leaseholders will also be scrapped.

Some building firms, such as house builder Taylor Wimpey, have agreed to pay for issues at their buildings. Mr Gove said that others, “many of whom have made vast profits” during the pandemic, should also agree to foot the bill, rather than “blameless” leaseholders.

Many of the properties affected by the cladding crisis have become unsellable and their owners left with astronomical bills for fixing the problem, as well as forking out for night watch security and increased insurance premiums. Not to mention the one in five estimated to have sold their flat at a loss or those who have had to remortgage at a higher interest rate because of the problem.

The residential property industry must now work with the government to agree how to tackle the problem and provide a fully funded plan that will include remediating unsafe cladding on these buildings. The cost is likely to be £4 billion.

Mr Gove said in a letter to the property industry that, in order to agree a settlement and plan before the March deadline, he is prepared to take action “including restricting access to government funding and future procurements, the use of planning powers, the pursuit of companies through the courts and – if the industry fails to take responsibility in the way that I have set out – the imposition of a solution in law if needs be.”

He also proposed to extend the time limit during which leaseholders could sue builders over defective flats from six to thirty years.

In the letter, Mr Gove asked industry to:

  1. Agree to make financial contributions this year and in subsequent years to a dedicated fund to cover the full outstanding cost to remediate unsafe cladding on 11-18m buildings, estimated currently to be £4bn;
  2. Fund and undertake all necessary remediation of buildings over 11m that you have played a role in developing (ie both 11-18m and 18m+). Any work undertaken by developers themselves on 11-18m buildings will reduce the total cost of cladding remediation that has be paid for through the proposed 11-18m fund; and
  3. Provide comprehensive information on all buildings over 11m which have historic fire safety defects and which you have played a part in constructing in the last 30 years.

Although welcoming the government’s decision, opposition housing secretary, Lisa Nandy, questioned how Mr Gove would force developers to now do the “right thing” when they had refused to do so for four years.

Home owners also said the plan did not go far enough, and did not cover other fire issues or interim costs, nor would the new plans cover buildings that were not between 11 metres and 18 metres in height.

Defective insulation, missing fire breaks and flammable balconies would not be included in the works, nor would those who have already paid for remedial work be compensated.

The average bill for replacing cladding is estimated at around £40,000 per leaseholder, but some have received bills over £200,000 – far in excess of the price they originally paid for their homes.

One would question why Building Control didn’t act to prevent the installation of faulty materials in the first place, or how developers can say they were unaware that the materials they were using were unsuitable for their purpose on any building, regardless of its height.

Replacing cladding on higher buildings will likely be more expensive than on smaller buildings, but the site itself has provided greater site density and therefore higher profits.

The cost of fixing a defect does not affect the ownership of responsibility, and any building that has be built using faulty or unsuitable products should be corrected – at the cost of the developer, whose responsibility it is to build safely, not those unaware of the problems.