UK Government Cladding Update

The UK government announced today a new fund worth £3.5bn to address unsafe cladding for all leaseholders in high-rise buildings over 18 metres. This is further to the Government’s £1.6bn Building Safety Fund created in March 2020 to help fix non-ACM cladding systems on high-rise blocks.

Housing Secretary Robert Jenrick made a statement to MPs today announcing the Government’s five point plan to remove unsafe cladding. The Government will offer leaseholders in buildings over 18 metres in England cash grants to remove unsafe cladding. However anyone living in buildings with dangerous cladding that are between 11 metres and 18 metres will not be eligible for the cash grants. Instead those leaseholders will be able to access a scheme of new of long-term low-interest loans for cladding removal. Under the scheme maximum repayments for leaseholders will be £50 a month.

The Housing Secretary also announced a new ‘Gateway 2’ levy on developers to be applied when they seek planning permission to build high-rise buildings. A separate tax will be introduced from next year on money made in UK residential property development. The Government aim to raise £2bn over the next decade. The Government say that this is to cover the cost of the grants, help pay for cladding remediation and “to ensure developers play their part” in addressing historical issue.

The announcement of the fund is a positive development for leaseholders who were looking at potential costs in the worst case of more than £100,000. However the fund may still fall well short of addressing all fire safety defects. A June 2020 report by the Housing, Communities and Local Government Committee titled “Cladding: Progress of Remediation” estimated that the Building Safety Fund would need to be increased to address all fire safety defects in every high-risk residential building—potentially costing up to £15 billion.

It also remains to be seen what impact this may have on the proposed amendments to the draft building safety bill and we await the Government’s response to the issues raised on this.