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Cladding costs update - government plan to make industry pay

Published: 12/01/2022

The government has this week changed its approach to building safety with a plan to protect leaseholders and make developers pay to fix the cladding crisis. In addition, the government’s plans for a loan scheme, which would have forced leaseholders in flats between 11 – 18 m tall to cover remediation costs themselves, is being shelved as these costs are instead to be met by the developers and companies responsible for the crisis.

Michael Gove, Secretary of State for Levelling Up, has written to the residential property developer industry on this new approach asking them to agree to:

- contribute to a dedicated fund to cover the outstanding cost of remediation of unsafe cladding on buildings between 11 - 18 m high (estimated to be some £4 bn)

- fund and undertake remediation of buildings of more than 11 m that they have been involved in developing

- provide information on buildings of more than 11 m which have historic safety defects in which they’ve played a part in constructing during the last 30 years.

Mr Gove has given the industry an opportunity to come up with a fully funded plan of action to remediate unsafe cladding on buildings between 11 - 18 m high before Easter failing which the government will be forced to impose its own solution by legislation. This is likely to be either through new levies or taxes on the industry.
Anew team is also being established to pursue and expose companies at fault, making them fix the buildings they built and face commercial consequences if they refuse. And officials will have access to a range of “tools” to force concessions from the developers, including the ability to exclude them from government-backed property and finance schemes such as Help to Buy.