Michael Gove broke the stalemate over who has responsibility for cladding removal costs by demanding that developers pay up, but his solution may only provide a partial relief for individual leaseholders.
Developers have been given until early March to agree how they will fund the estimated £4billion cost of removing cladding from medium-rise flatted blocks (between 11m and 18m in height). Gove said he wants to publish a fully funded plan of action at this stage and he is prepared to enforce a solution, if a deal is not agreed by that date.
A similar demand for financial contributions has been made of cladding and insulation manufacturers. Gove has also asked that they provide comprehensive information on all buildings over 11m which have historic fire-safety defects to which the companies have supplied products or services.
The motivation for the Secretary of State for Levelling Up, Housing and Communities, is to spare individual leaseholders, including shared owners, from having to shoulder the cost of removing unsafe combustible cladding from their homes. This follows the Government funded remediation programme for making high-rise blocks safe across the social and private sectors.
But his initial announcement and subsequent communications have not clarified responsibility for other costly and essential building safety works, such as replacing faulty insulation and fire doors, installing fire alarms and water sprinkler systems. So it is possible that leaseholders will still face some hefty bills. Developers have also pushed back saying that responsibility for the remediation work should be shared with manufacturers and the Government.
Although social landlords are not expected to contribute to the £4bn funding pot, they have not been given access to any other Government backed loans or grants to complete cladding removal or other safety works to medium and low-rise flatted blocks they own and manage.
Instead Gove has encouraged councils and housing associations to recover remediation costs from responsible parties (presumably developers and builders) where possible, and absorb any costs that they themselves are responsible for.
Further clarification required
Similarly there is uncertainty over the position of landlords who own individual leasehold flats in medium rise blocks and rent them out. Buy to let flats will exist in both the social and private sectors. The NRLA has written to Mr Gove highlighting that at least half of their landlord members are basic rate taxpayers and own a single rental, which they let out to boost their pensions.
The NHF and LGA are working with the Government to clarify how non-cladding related works will be paid for, as well as details of how housing associations can access the £4bn funding.
Gove has acknowledged housing associations’ unique social purpose and the impact that building safety costs have on the sector’s wider work, and has offered to work closely with the sector to mitigate this impact.
The Secretary of State also set out a strong commitment to increasing the supply of social housing and improving the quality of existing homes – and offered to work closely with the social housing sector to achieve this.
Other steps taken by the Government include:
- Withdrawal of the consolidated advice note on building safety and its replacement with a new Publicly Available Specification (PAS 9980), which contains risk-based guidance for assessing external wall systems;
- Commencement of the Fire Safety Act will extend fire safety responsibilities to cover all external walls and common parts, including doors to individual flats, in any multi-occupied building regardless of height;
- A new scheme will be brought forward to provide professional indemnity insurance for building assessors, to help increase capacity in this field;
- Buildings between 11m and 18m in height will be considered safe unless there is evidence to the contrary. Building owners are encouraged to challenge judgements from building assessors that they believe may be excessively risk averse; and
- The Building Safety Fund will be reviewed to ensure it is in line with the Government’s expectations of a risk-driven approach to remedial works, and information on the progress of applications to the funds will be made available to residents.
As an incentive to react positively to his demands, Gove has warned developers, manufacturers and installers that any of them who fail to contribute to the remediation fund face being frozen out of future publicly funded contracts, or even being banned from trading in the UK.
By Patrick Mooney, Editor