The Mayor of London, Sadiq Khan, has proposed that the government should introduce a groundbreaking levy on major private property developers that could raise £3 billion to address the “rampant inequality in building safety standards and fund vital cladding replacement work on properties across London”.
According to a statement from the mayor's office, thousands of Londoners “continue to live in a state of constant anxiety over the safety of their homes and the cost of putting right past failures” three-and-a-half years after the Grenfell Tower fire.
It states that “whilst some organisations have done the right thing, the failure of government, developers and building owners to fund this essential work for all means too many residents face extortionate bills to rectify unsafe homes, with ministers failing to bring forward a solution to the crisis”.
Therefore, the mayor is proposing “a one-off levy on developer profits generated over the last decade to fund the essential fire safety work that is needed”.
City Hall’s analysis of accounts data for publicly listed housebuilders has revealed pre-tax profits of £30 billion over the past decade. A 10 per cent levy would raise at least £3 billion to carry out remediation work and help to ensure that no leaseholder is left out of pocket.
To ensure that the levy is paid in full without affecting future development, Khan is proposing that repayment could be made over a number of years. The government could then act quickly to fund building safety work, with the reassurance that funds from the levy would cover the costs.
A levy at 10 per cent repaid over 10 years would reduce the typical profit margin developers make on new homes from 20 to 18.7 per cent – a very small contribution for the enormous impact remediation works would have on people’s safety and quality of life, says the mayor’s office.
This is the latest intervention from the mayor, whose office says has “repeatedly lobbied the government to ensure residents in unsafe buildings don’t have to pay for the cost of making their homes safe, and has pressed building owners to speed up the replacement of unsafe cladding”.
In September the mayor wrote to 40 private landlords to demand that they put the safety of their residents first and begin work to remove the most dangerous aluminium composite material (ACM) cladding from their buildings. London has more than twice as many private blocks with ACM cladding as the rest of the country combined.
Khan said: “I have always been clear that the responsibility for funding building safety work must lie with government. However, we cannot deny the role that industry has played in making decisions that have compromised the safety of buildings.
“I am determined to find a solution that can make homes safe without passing on the burden of the cost to leaseholders – it is wrong for them to bear the costs of historic errors they have played no part in causing. This levy would have a minimal impact on developer profits but would prove life-changing for London leaseholders.”
A Ministry of Housing, Communities and Local Government spokesman said: “We know many people are worried – which is why our priority is making sure residents are safe and feel safe in their homes by removing dangerous cladding as quickly as possible – backed by £1.6 billion funding. We are making significant progress, with work complete or under way in 84 per cent of high-rise buildings with ACM cladding, rising to above 99 per cent in the social housing sector.
“We are also considering a range of options to fund future remediation work and this work is ongoing, and we continue to work with a range of stakeholders including leaseholders and the finance industry. Further detail will be set out in due course."