The government has revealed a wide-ranging agreement that will see the building industry contribute £5 billion to address the building safety scandal.
Levelling-up secretary Michael Gove has agreed on a solution with the housing industry that will see developers commit a minimum of £2 billion to fix their own buildings. The industry will also pay an estimated further £3 billion through an expansion to the building safety levy.
Under the agreement, which will become legally enforceable, more than 35 of the UK’s biggest homebuilders have pledged to fix all buildings of 11 metres or higher that they have played a role in developing in the past 30 years, as reported by Facilitate yesterday.
For the companies yet to make the pledge, Gove has also confirmed there is little time left for them to sign up, and that those who continue to refuse will face consequences if they fail to do so.
The government is introducing new powers that allow enforcement on any remaining companies who fail to sign up, as well as those that breach the agreement they have signed up to. These new powers would allow the secretary of state to block those who refuse to make and deliver on their commitments from building or selling new homes.
As set out in January, a new government scheme will also see industry pay to fix buildings where those responsible cannot be identified or forced to in law. This follows previous confirmation that plans for a 30-year loan scheme paid for by leaseholders would be scrapped.
The new scheme will be funded through an extension to the building safety levy that will be chargeable on all new residential buildings in England. This is expected to raise up to an additional estimated £3 billion over 10 years from developers and ensure that no leaseholder in medium-rise buildings faces crippling bills, even when their developer cannot be traced.
New proposed laws, announced in February under the building safety bill, will ensure that qualifying leaseholders are protected from the costs of historical building safety defects, including total protection against cladding costs.
Gove said the announcement marked "a significant step towards protecting innocent leaseholders and ensuring those responsible pay to solve the crisis they helped to cause".
He said: "I welcome the move by many of the largest developers to do the right thing. But this is just the beginning. We will do whatever it takes to hold industry to account, and under our new measures there will be nowhere to hide.”
The pledge published by the government today commits developers who have signed up to legally binding contracts, and to implement their promises as soon as possible.
The detailed agreement confirms that developers will:
- Act as quickly as possible to fix buildings
- Implement new proportionate guidance on building safety
- Regularly report to leaseholders and government on their progress
- Respect an independent dispute resolution process established by government; and
- Refund money already received from the taxpayer to fix their buildings.
More information on how the government plans to enforce the agreement in law will be released in due course.
The government is clear that building safety is an industry-wide issue. Cladding and insulation manufacturers “are yet to accept their share of responsibility and come forward with a proposal”, says the government. The secretary of state has also written to the Construction Products Association and "warned he will do whatever it takes to hold cladding and insulation manufacturers to account".
This announcement follows a statement from Gove in January setting out a four-point plan to reset the approach to building safety and give leaseholders more protection against unfair costs.
Responding to the announcement that more than 35 major UK developers have agreed to fix dangerous buildings they have built, Councillor David Renard, housing spokesperson at the Local Government Association, which represents 350 councils across England and Wales, said: “We are pleased that the government has listened to calls the LGA has been making for several years to protect leaseholders from the costs of two decades of industry failure.
“However, we call on the government to provide the same protection to council tenants and council taxpayers as it has afforded homeowners, by exempting councils from the developer levy and funding the remediation of social housing on the same basis as private housing.”