In a statement to the Commons, and in a letter sent to the industry, the Housing secretary gave the industry a window of opportunity to agree a settlement and produce the plan with a deadline of early March and adding that he is prepared to take “all steps necessary” to make this happen including restricting access to government funding and future procurements, the use of planning powers, the pursuit of companies through the courts and "the imposition of a solution in law if needs be.”
In the letter, the secretary of state asks companies to agree to:
- make financial contributions to a dedicated fund to cover the full outstanding cost to remediate unsafe cladding on 11-18m buildings, currently estimated to be £4 billion
- fund and undertake all necessary remediation of buildings over 11m that they have played a role in developing
- provide comprehensive information on all buildings over 11m that have historic safety defects and which they have played a part in constructing in the past 30 years
Gove states that he will open discussions through a roundtable bringing together 20 of the largest housebuilders and developer trade bodies, followed by ongoing negotiations with all those in scope.
He adds: “It is neither fair nor decent that innocent leaseholders, many of whom have worked hard and made sacrifices to get a foot on the housing ladder, should be landed with bills they cannot afford to fix problems they did not cause.
"Government has accepted its share of responsibility and made significant financial provisions through its ACM remediation programme and the Building Safety Fund. Some developers have started doing the right thing and funded remedial works and I commend them for those actions. But too many others have failed to live up to their responsibilities.
“I am now offering a window of opportunity, between now and March, for the industry as a whole to work with my department through open and transparent negotiations to agree a settlement that will restore confidence and ensure the industry that caused the problem pays to fix it.”
In response, Stewart Baseley, executive chairman of the Home Builders Federation, said: “Leaseholders should not have to pay for remediation of buildings and the previously proposed loan scheme has proved to be impractical.
“The largest UK based housebuilders, who only built a minority of the affected buildings, have already spent or committed approaching £1 billion to remediate affected buildings and the recently announced Property Developers Tax will raise billions more. 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.”
He added that the most urgent action remains for government to define guidance and work with lenders, insurers, surveyors and the construction industry to understand what remediation work needs to be done to resolve issues for residents.
He concludes: “Specifications for buildings would have been in accordance with Building Regulations set by government at the time of construction. As well as developers and government, other parties should be involved in remediation costs, not least material manufacturers who designed, tested and sold materials that developers purchased in good faith that were later proved to not be fit for purpose.”
Kate Davies, Executive Director, IMLA, comments on the Secretary of State for Housing, Communities and Levelling Up’s announcement today on the cladding crisis:
“Today’s announcement on the cladding crisis will be welcomed by beleaguered leaseholders, but there are still points that need urgent clarification for both renters and developers. Mr Gove’s mention of ‘commercial consequences’ and the statement that leaseholders will be able to sue builders for up to 30 years, provide punchy headlines but few specific details. The question of enforcement is one that will loom over the sector, as taking builders to court will require time, money and courage from already-exhausted leaseholders and, if undertaken by the Government, gives little relief to leaseholders in the interim.”
“The statement that the Government will seek a ‘solution in law’ for slow-moving developers is promising, but also suggests further delays and a timescale that is of little reassurance to leaseholders here and now. Withdrawal of the consolidated advice note is also welcome but, again, we have questions around how long it will take the BSI to draw up the promised new proportionate guidance.”
“Even where the Government provides a timeframe, this vagueness persists. Developers have been given two months to create a plan for resolving the growing cladding costs crisis but, without a sense of the time required for the Government Apex taskforce to identify and contact recalcitrant developers, leaseholders have been given little more of a promise than ‘trust us and wait.’”
“Today’s news also avoids discussing the other non-cladding issues and building defects that have been uncovered whilst cladding has been reviewed across the UK. Many freeholders and management companies are passing these costs onto leaseholders, and we need to see a proposed solution that encompasses all these problems in addition to addressing the primary concern of cladding.”
“In July 2019 the House of Commons Committee on Housing, Communities and Local Government published an excoriating report into Leasehold reform which called for numerous measures to be taken to protect leaseholders. The Government has responded positively to some of the recommendations, but new legislation will be required to give effect to many others. And as we know, legislation takes time…”
“Announcements on how we are to remedy the cladding crisis are always welcome and today’s news goes some way to reassuring leaseholders; however, we urgently need specific details of processes and timeframes to ensure that these gains do not dwindle into unfulfilled promises to leaseholders and idle threats for those developers that are not dealing with the issues in a timely fashion.”
