Gove tells developers to stump up £4bn for cladding fix
The money will be used to replace unsafe cladding on buildings between 11 and 18 metres tall.
Off the back of Housing Secretary Michael Gove’s ‘polluter pays’ proposals, share prices at major housebuilders including Taylor Wimpey, Persimmon, Barrett, Bellway and Redrow were down an average of 3% this morning.
Gove has given the development community until March to come up with a funding plan to raise £4bn to make affected buildings safe.
If the deadline is not met, he has pledged to explore legal avenues to force developers to pay.
In a letter to the development community, Gove said he is “prepared to take all steps necessary” to make developers pay, including restricting access to government funding and future procurements, the use of planning powers and the pursuit of companies through the courts.
A solution law could be imposed “if the industry fails to take responsibility in the way that I have set out,” Gove warned.
“For too many of the people living in properties your industry has built in recent years, their home has become a source of misery. This must change,” he added.
The government has already set up the £5bn Building Safety Fund to support leaseholders living in dangerous buildings taller than 18 metres, but to date, the outlook for those in shorter buildings has been more uncertain.
Gove’s plan to get developers to pay for the remediation of these buildings has been cautiously welcomed by leaseholders living in properties affected by the cladding crisis.
“It is a step in the right direction. We thank Mr Gove for recognising how unfair it is that leaseholders are still being forced to pay,” said Giles Grover, of Manchester Cladiators, a campaign group set up to lobby for government action over the cladding crisis.
However, Grover said there were still concerns that the plan did not go far enough.
Gove’s developer contributions would only pay for the removal of unsafe cladding but would not cover other fire safety works required. In July 2021, the Building Safety Bill proposed tightening legislation around the construction of homes.
“We need a coordinated and holistic approach to the issue in Greater Manchester and the rest of the country. It is a collective failure brought about by broken regulations that successive governments have presided over,” Grover said.
Gove’s developer contributions would replace the loans plan put forward by former Housing Secretary Robert Jenrick. Under the previous plan, leaseholders would have had to take out loans to cover the cost of remediation, a plan that was criticised by campaigners at the time.
Stewart Baseley, executive chairman of the Home Builders Federation, said the previously proposed loan scheme “has proved to be impractical”, adding that leaseholders “should not have to pay for remediation of buildings”.
However, HBF called on the government to be “proportionate” in its approach to seeking developer contributions and place some of the burden on material manufacturers that “designed, tested and sold materials that developers purchased in good faith that were later proved to not be fit for purpose”.
“We will engage directly with government but any further solutions must be proportionate, and involve those who actually built affected buildings and specified, certificated and provided the defective materials on them,” Baseley said.
“However, the most urgent action remains for the government to define guidance and work with lenders, insurers, surveyors and the construction industry to understand what remediation work actually needs to be done to resolve issues for residents quickly and simply.”
The March deadline for a funding solution is ambitious, according to Andrew Rimmer, partner at law firm JMW.
“While today’s announcement will be welcomed by the owners of affected homes, developers will be fearing the financial impact, which for some could be colossal,” Rimmer said.
“March is an extremely ambitious timeline in which to expect the industry to have collaborated and be singing from the same hymn sheet, and there is a great deal of ambiguity in the new approach which still needs to be clarified, such as the part that contractors will play in the ongoing negotiations, along with other parties involved in the construction of the affected buildings.
“The government is, unfortunately, unlikely to see a speedy resolution – it is an extremely complicated issue which in some cases involves buildings built more than a decade ago. We can expect a lot of finger pointing as parties try to determine where liability now lies.”
It’s a mess that successive governments, local authorities, manufacturers, architects and building companies have jointly caused.
The last people on the hook for any remediation needs to be the above and NOT innocent home owners who bought their properties in good faith.
There are estimated to be 1m people caught up in this fiasco who now cannot sell their homes and face bankruptcy.
Gove, to retain any credibility he may have, needs to indemnify home owners from any costs.
By Observer
Grandstanding by Gove, the government washing itself of any responsibility.
Of course developers should pay as should manufacturers but if the Tories had not decimated building control and regulatory bodies the chances of Grenfell happening would be much lower.
Why has it taken so long to get to this point?
By snowman
The regulation around building is now very poor. I wonder how many scandals will blight our cities in years to come as a result.
And yet someone in the department for communities continually wants to make things ever easier for cowboys. Who and why. That should probably be Goves first line of enquiry.
By Jeff
There’s a fundamental point here which I don’t understand and would welcome accurate guidance from the good readers of Place NW.
Presumably the cladding now considered inadequate was perfectly lawful at the time it was specified by architects and their clients? And presumably it is now only deemed inadequate by dint of legislation and the horrors of Grenfell? And if they are both the case (ie all parties followed the laws of the day) then surely it’s up to government to indemnify replacement, not the industry and certainly not the poor householders?
By Sceptical
@Sceptical…the detailed investigations that are ongoing into rainscreen cladding installation (and particularly the retro-fitted over-cladding to existing social housing mid-rise and high-rise) is uncovering cladding components that were never installed correctly, particularly vertical and horizontal fire barriers / breaks. That, and other similar examples, are generally where developers are being held accountable. Other scenarios exist where blame is apportioned differently.
The sweeping headlines in media publications (PNW included) don’t really help to differentiate what is a complex affair.
By Hop-Scotch
Cladding isn’t the only issue and on a lot of buildings not even the main one. Insulation and lack of fire breaks are also a huge problem. In order to get an EWS1 form that passes lenders criteria all must be of a certain standard. I wish the conversation would be more about this and not just “cladding”. Also if MCC are found to have signed buildings off without fire breaks they should be on the hook also.
By Bob
Can we say this is the beginning of regenerating the regeneration? Some of these buildings are barely 10 years old. Disgusting by the industry and the fallout is mostly on the young. David Cameron wanted a “bonfire of regulation” ten years ago. We are constantly reminded why it actually matters and it is about balance, not either/or.
By Anonymous
All well and good Mr Gove but I’ll be interested to see how many small and medium sized developers have the cash levels to pay this new commitment. I suspect that many will choose to put their businesses or subsidiaries into liquidation proceedings. As others have said, much of the responsibility will lie with the government for applying inadequate standards. If companies cheated and didn’t conform to the prevailing standards they deserve to get hammered, both financially and legally, but for the majority who played by the rules, it ain’t their fault!
By ian Jones