THE GOVERNMENT’S five point plan aims to ‘provide reassurance to homeowners and confidence to the housing market’.
The announcement yesterday saw the government reveal a new £3.5bn fund to ‘fix cladding on high-rise buildings’, while money will also be provided for loans to leaseholders ‘to address problems in shorter buildings’. It was launched after ‘growing pressure’ from hundreds of thousands of leaseholders facing huge bills, as well as backbench Conservative MPs and the survivors and bereaved from the Grenfell Tower fire.
With it estimated that around 274,000 flats have been fitted with dangerous cladding, according to the Association of Residential Managing Agents, the crisis is thought to now be ‘affecting more than 650,000 people’ nationwide. This also does not take into account those living in lower rise structures ‘where problems have also emerged’, with those added meaning the figure ‘is likely to reach into the millions’.
The announcement of extra funding by Housing Secretary Robert Jenrick builds on earlier government funding pledges for cladding remediation, though by the end of 2020 ‘fewer than half’ of the 462 affected buildings in England had been ‘completely fixed’. In turn, works were only underway on 201, and had not even started on 45 buildings.
Both MPs and campaigners had previously said the existing funding ‘was not enough’ and ‘failed to cover’ other fire safety issues and interim costs, nor that it helped leaseholders ‘unable to sell their homes and facing a physical and mental toll’ that MPs had said ‘amounted to a public health crisis’. The government has now given further details on the plans, namely a five point strategy that aims to ‘provide reassurance to homeowners and confidence to the housing market’.
Housing Secretary Robert Jenrick announced that the government would fund removal of combustible cladding ‘for all leaseholders in high-rise buildings’ above 18m, while a new levy and tax on developers would ‘ensure industry contributes’, with the measures to ‘boost the housing market and free up homeowners to once again buy and sell their properties’.
The £3.5bn in new funding means a total of £5bn has been provided by the government, with 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’.
It also said it was working with industry to ‘reduce the need’ for external wall review (EWS1) forms, thus ‘preventing leaseholders from facing delays’ and allowing for purchases and sales. A ‘Gateway 2’ developer levy was also announced, that will be ‘targeted’ and ‘apply when developers seek permission to develop certain high-rise buildings’, alongside a new tax for the UK residential development sector that aims to raise £2bn over a decade to fund cladding remediation.
The tax aims to ‘ensure that the largest property developers make a fair contribution to the remediation programme, reflecting the benefit they will derive from restoring confidence to the UK housing market’. Legislation being brought forward this year to ‘tighten the regulation’ of building safety will, alongside review the construction products regime, help ‘prevent malpractice arising again’.
It concluded by noting that the new measures ‘will mean people living in homes which they have been prevented from selling, or re-mortgaging, through no fault of their own, will now be able to move on with their lives’. Mr Jenrick stated: ‘This is a comprehensive plan to remove unsafe cladding, support leaseholders, restore confidence to this part of the housing market and ensure this situation never arises again.
‘Our unprecedented intervention means the hundreds of thousands of leaseholders who live in higher-rise buildings will now pay nothing towards the cost of removing unsafe cladding. Remedying the failures of building safety cannot just be a responsibility for taxpayers. That is why we will also be introducing a levy and tax on developers to contribute to righting the wrongs of the past.
‘These measures will provide certainty to residents and lenders, boosting the housing market, reinstating the value of properties and getting buying and selling homes back on track. We are working with lenders and surveyors to make this happen. Our landmark intervention will make homes safer and free those who did the right thing – saving for years to get on the property ladder – to enjoy the homes in which they have invested so much.’
On the EWS1 situation, the government said it was ‘aware’ that securing ‘appropriate’ professional indemnity insurance for the work was a ‘major barrier’, and so it said it was ‘committing’ to work towards a ‘targeted, state-backed’ indemnity scheme for professionals unable to obtain said insurance for the EWS1 surveys. It would ‘work closely’ with industry to design such a scheme, with more details to come.
Last week, it was reported that the Treasury was being beseeched to add a ‘substantial’ amount of cladding remediation funding, with a ‘Cabinet tussle’ over increased funding seeing pressure ‘mounting’ on Chancellor Rishi Sunak from Housing Secretary Robert Jenrick. Ministers were ‘considering’ imposing levies on construction firms, with government sources discussing the ‘intensive efforts’ made to add a ‘substantial sum’ to a developers levy.
Earlier this month the government was said to be considering funding fire safety works on residential blocks via a £2bn levy on developers - which could raise up to £200m a year for a total of £2bn in 10 years, and ‘could mean a levy on all high rise flats and [a] separate charge on major builds’ to ‘atone for building tens of thousands of flats and homes with unsafe cladding and insulation in recent decades’.
There were however ‘grave concerns’ expressed by the All-Party Parliamentary group for Leasehold Reform after their meeting with government adviser Michael Wade last month. Co chairman Justin Madders understood ministers were ‘going ahead’ with a loan scheme that ‘puts the majority of costs on the unquestionably innocent party. The government is going to frontload it in a way that gets the work done, but ultimately saddles people with huge debts’.
A fortnight ago, Prime Minister Boris Johnson promised that the government would provide a plan for the crisis ‘very shortly’, while Labour brought forward a vote and a list of proposals to parliament yesterday that aimed to protect leaseholders from paying for fire safety works – including remediating cladding.
December’s reveal that Mr Wade – the government’s advisor appointed to advise on cladding issues – had been ‘working on a proposal to provide long-term finance to buildings to pay for remediation work’ had been reported earlier that month to have been in the form of flat owners taking on 30 year loans ‘akin to a second mortgage’ to fix fire safety issues.
Mr Wade, an insurance executive appointed last July, was said to have been ‘considering long-term loans’ as a solution to protecting leaseholders from ‘unaffordable’ costs ‘without burdening taxpayers further’. This was said to potentially mean ‘hundreds of thousands’ of flat owners could ‘be forced to take on 30-year loans akin to a second mortgage’ to fix issues.
Building Safety and Fire Minister Lord Greenhalgh had told the House of Lords in December that levies ‘do not raise very much, and you have to balance that with the need to build more homes’, though later ‘advocated’ them as helping to allow developers to ‘regain the public trust needed to carry on in business’.
Most recently, Barratt became the first construction firm to call for a levy on developers to ‘bail out victims’ of the cladding crisis, with the company stating that the industry had a ‘collective responsibility’ to cover the costs. Despite this, leaseholders living in the company’s homes said they had ‘already paid tens of thousands’ for ‘stop-gap safety measures’ while waiting for repairs to begin.
Both MPs and campaigners welcomed the move, but while calling on ‘others to follow suit’, they also warned that developers must not be able to get away with ‘token gestures’. Most recently, leaseholders were reported to potentially see their insurance claims paid by the government.
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