THE NATIONAL Housing Federation (NHF) and Local Government Association (LGA) outlined their concerns that the government plans for remediating buildings below 18m could ‘impact’ housing association’s borrowing and ‘lead to fewer affordable homes’.

The government announced earlier this month a five point plan that aims to ‘provide reassurance to homeowners and confidence to the housing market’, in which Housing Secretary Robert Jenrick announced the government would fund removal of combustible cladding ‘for all leaseholders in high-rise buildings’ above 18m.

The £3.5bn announcement will aid the complete funding of all cladding for buildings 18m and above ensuring ‘funding is targeted at the highest risk buildings in line with longstanding independent expert advice and evidence’. The government cited Home Office analysis of fire and rescue service statistics, which showed that buildings between 18m and 30m ‘are four times as likely to suffer a fire with fatalities or serious casualties’ than apartment buildings ‘in general’.

Lower rise buildings between 11m and 18m will ‘gain new protection’ from a ‘generous new scheme’ that will pay for cladding removal via a ‘long-term, low interest, government-backed financing arrangement’ meaning no leaseholder will ‘ever pay more than’ £50 a month towards cladding remediation.

The government claimed this would ‘provide reassurance and security’ to leaseholders, while mortgage providers ‘can be confident’ that where cladding needs to be removed, properties ‘will be worth lending against’. While Lord Greenhalgh also recently said that as well as a levy on developers, the government is considering forcing cladding manufacturers to ‘contribute’ to remediation costs, he recently told cladding campaign groups that the loans may be the ‘only answer’.

Inside Housing and Construction News both reported on a meeting of the Housing, Communities and Local Government Committee (HCLGC), which saw NHF chief executive Kate Henderson and LGA building safety spokesperson Lord Porter criticise the loans plan, with Ms Henderson stating that ‘some housing associations have expressed concern’ that the loans could ‘impact their borrowing capacity’ should the loans sit with the building and not individual leaseholders.

While she expressed her concerns about this point, she also said the NHF did not agree with the alternative approach of issuing the loan directly to the leaseholder’, adding that ‘we don’t think that would be acceptable and we don’t think leaseholders should pay’. Lord Porter added: ‘We’re adamant that leaseholders shouldn’t be the ones picking up the bill for this.

‘Out of everybody involved with the building safety crisis, the only people we can all guarantee are innocent are the leaseholders and the tenants so it’s a very bizarre position where the least guilty are the most financially penalised. To be fair to anybody who’s trying to look at it, without seeing the real detail of the loan system we don’t actually understand how that’s going to work.

‘If there’s an intention that the loan sits with the building rather than the leaseholder then at some point when the leaseholder tries to sell then the sale price will reflect that there’s a charge outstanding for paying back the loan.’

Ms Henderson also noted that the lack of funding for housing associations’ tenanted properties ‘is going to be another challenge for the sector in terms of some lenders then being very risk-averse in terms of how they will lend to housing associations that have high-rise buildings in terms of using that funding against loan security’.

Construction News noted that Lord Porter also believed that the cost of a levy on developers would ‘only be passed down to homebuyers’, with the Gateway 2 levy planned by the government applying when developers seek permission to develop certain high rise buildings, ‘yet to be specified’ in England.

He noted: ‘The industry won’t take that money out of its bottom line, will it? It’ll pass it through. Putting a levy on the construction industry will impact on new homes being built. The development industry will just say, “if we have got to pay an extra tax on these buildings, that gives us less money on the building site, the site is less viable, so we’re going to give you less affordable homes as a result of that”. That will impact on the number of affordable homes being built.’

He added that using a levy was also not fair on firms not involved in installing combustible cladding, stating: ‘There are a lot of people in the building industry who didn’t build the flats that we’re talking about, and there is a kind of moral position in why should that part of the construction industry that’s not responsible for this pick up that bill.’

In his view, those ‘gaming the system’ should pay for remediation, and he said: ‘We should have gone after the crooks and the rogues first and then sorted out everything afterwards. We knew that there were people that were gaming the system from early doors post-Grenfell, and we should have gone for them first. That’s where the money should’ve come from ideally. At least then the principle would be established that if people do bad things, they’ve got to pay the price for it.

‘At the moment, we’ve got a system where people who do good things are paying the price for it and the people who do bad things are still walking around scot-free. It can’t be right.’

UK Cladding Action Group co founder and leaseholder Will Martin called the levy ‘an absolute farce’, and added: ‘The idea of a £200m-a-year levy for 10 years is entirely inadequate, so the developers are laughing. They have got away scot-free. These are the people that have created this problem. It’s an absolute farce and it really puts it into perspective how little this levy is.’

Read our article 'What is cladding?' here