Newsflash:  Extra £3.5bn promised to tackle unsafe cladding

Housing Secretary Robert Jenrick MP has announced “an exceptional intervention” promising that leaseholders in high-rise buildings above 18 metres will bear no costs for replacing dangerous cladding. It is to be the largest government investment in building safety. The highlights include:

  1. £3.5 billion to be added to the £1.6 billion pledged last year; so £5.1bn total. This funding is for cladding in high rise buildings over 18m/6 storeys.
  2. A long-term, low interest loan for buildings between 4-6 storeys. Government pledged that no leaseholder would pay more than £50pcm. The loan would be on the building and should not affect leaseholders’ credit ratings. Costs above the £50 pcm cap would likely be met by the tax payer.
  3. Taxpayers, some of whom are not homeowners themselves, should not have to foot this bill any more than leaseholders. Developers must contribute to these costs:

              3.1 A Gateway 2 developer levy implemented through the upcoming Building Safety Bill where developers seek permission to develop high rise buildings. In addition…

              3.2  A new tax on residential developers, from 2022, that is expected to bring in £2 billion over 10 years, directed purely to alleviating cladding issues. Government is to consult on the policy design in due course.

  4. In restating some existing policy announcements and work, Mr Jenrick confirmed the risk of a fatal fire is low. Last year, 10 people died in fires in blocks over 11m. This is an all-time low and 29% less than a decade ago. 1,700 people died on our roads in 2019. But any death is one too many. He said there should be a proportionate approach to a world class building safety regime. Hence government is bringing forward the Building Safety Bill, the new Building Safety Regulator, a National Register of Construction Products and has worked with RICS to reduce EWS1 use to over 500,000 flats in buildings between 11-18m. Lenders are expected to respond positively to support the current government intervention.

Mr Jenrick said that insurance companies now need to step up and ensure premiums are correct as he suspects they have been exploiting leaseholders. "We are working with insurance sector and they do now need to take a more risk based proportionate approach”.

Mr Jenrick confirmed that some developers have come forward to fix buildings, but many have not. Developers should still come forward and pay to fix. However, chasing developers, who may have been shells companies or be long gone is not a simple as some suggest.

Mr Jenrick claims these measures combined will “remove unsafe cladding, provide certainty for leaseholders and make developers pay for mistakes of the past.”   

Shadow Secretary of State, Thangam Debbonaire MP responded for the Opposition, criticizing the length of time it has taken to remove unsafe cladding and repeating the Labour Party’s demand that an independent taskforce be set up to prioritize building remediation in accordance with risk, and to ensure that leaseholders in buildings smaller than eighteen meters are not forced to pay for remediation costs. The Shadow Secretary of State further demanded clarity on the terms of the loan scheme.    

IRPM, with ARMA, managing agents, cladding campaigners and other stakeholders have campaigned hard for this type of intervention. IRPM warmly welcomes the additional funding, which will go a good way to address the remediation of cladding in high rise buildings. However…

  1. An extra £.5bn is unlikely to be sufficient.
  2. There was no mention of any funds towards the other fire safety costs, such as internal compartmentation, insurance, waking watch, etc. that are thought likely to be at least a similar amount again. Fixing the cladding without fixing the other problems makes little sense.
  3. There was no mention of those that had already paid out for remediation and/or other costs, i.e., that the funds could be applied retrospectively.
  4. There was no mention of prioritising remediation of buildings according to risk to life.

For IRPM’s Scottish members, Mr Jenrick robustly pointed out that funds sent to Scotland for remediation had not been issued by a Scottish government, which was holding onto the funds presently

Felicity Buchan MP (Con) observed in response that the cost of meeting the above £50 cap of the loan scheme, added to the £5.1bn already announced might take the total government contribution into the mid-range of the £5-10bn demanded to fix the cladding crisis.

Clive Betts MP, Chair of the Housing, Communities and Local Government Select Committee, observed the funds did not go to Housing Associations and Councils, who needed funds if they were to maintain existing and building new social housing.

Click here to read the full announcement