Robert Jenrick

Jenrick to introduce developer tax to help fund unsafe cladding removal

Housing secretary Robert Jenrick has pledged a further £3.5bn to fund the removal of unsafe cladding for all leaseholders in high-rise residential buildings as part of his five-point plan announced on 10th February.

This aims to provide reassurance and security to leaseholders and confidence to mortgage providers that, where cladding removal is needed, properties will be worth lending against.

The money will ensure funding is targeted at the highest-risk buildings (18 metres and above), in line with independent expert advice and evidence.

Lower-rise buildings with a reduced risk to safety will gain new protection from the costs of cladding removal with a new scheme offered to buildings between 11 and 18 metres. 

This will provide funds for cladding removal (where needed) through a long-term and low-interest, government-backed financing arrangement.

Under this, no leaseholder will ever pay more than £50 a month towards it.

In order to help pay for cladding remediation costs, a new tax will be introduced for the UK residential property development sector, which is expected to raise at least £2bn over a decade. 

The tax will ensure that the largest property developers make a fair contribution to the remediation programme. 

Consultation on the policy design is set to begin in due course.

The housing secretary also reported plans to introduce a ‘Gateway 2’ developer levy, which will be targeted and applied when developers seek permission to develop certain high-rise buildings in England.

The government is looking to bring forward legislation this year to tighten the regulation of building safety and to review the construction products regime to prevent malpractice arising again.

It is also working towards a targeted, state-backed indemnity scheme for qualified professionals unable to obtain professional indemnity insurance for the completion of EWS1 forms.

Further details on the scheme, including eligibility and the claims process, are expected to be provided in the coming weeks.

“These measures will provide certainty to residents and lenders, boost the housing market, reinstate the value of properties and get buying and selling homes back on track, said Jenrick.

“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.”

While Barclays and Nationwide Building Society welcomed the £3.5bn grant funding, hoping that this would bring some relief to people worried about the safety of their homes, Andrew Southern, chairman at Southern Grove, said that the decision to tax developers — most of whom he argued weren’t responsible for the cladding crisis — was “laughable”.

“Why should a company that has never installed dangerous cladding, and perhaps never built high-rise blocks in the past, be tarred with the same brush and penalised when they’re no more responsible for this scandal than those in other sectors building cars, running our hospitals and educating our children?

“This sort of regressive tax will only stagnate housebuilding, which is the exact opposite of what the UK needs. 

“By applying it only to the largest developers building the tallest buildings, it will also disincentivise creation of housing in the high-density areas that are badly in need of new stock.”

Israel Moskovitz, CEO at Avon Group, added: “It is right that the fund to remove unsafe cladding is increased, which will finally end the months of confusion and anxiety for many thousands of people — however, the funding must go further.

“The government’s decision to exclude thousands of leaseholders from access to this relief will take some people back to square one.”

Jonathan Frankel, head of the property litigation department at Cavendish Legal Group, claimed that the funding grant was “completely insufficient” to deal with even a fraction of the blocks up and down the country where these repairs must take place.

“But the fact that it only applies to buildings over 18 metres will cause even more uncertainty for those residents and leaseholders living in lower-rise blocks where they feel insecure and unsafe. 

“It may be considered a lower risk, but it’s a risk nonetheless which will impact the saleability of their property.”

Leave a comment