Jenrick unveils extra £3.5bn cladding fund, ‘developer levy’ and new tax for residential development
Housing secretary Robert Jenrick has unveiled a new £3.5bn package towards the removal of unsafe cladding from high rises, plans for a “developer levy” and a new tax on the UK’s residential property sector.
Robert Jenrick today announced a new funding package for cladding remediation (picture: Chris McAndrew)
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In a House of Commons speech today, Mr Jenrick said that the “unprecedented intervention” would ensure that leaseholders in high-rise towers taller than 18m would pay “no costs” for cladding remediation.
The new money comes on top of a £1.6bn Building Safety Fund, which the government announced last year.
Mr Jenrick also unveiled a new “long-term” loan scheme for residents living in buildings below 18m, with individual monthly payments to be capped at £50 per month. Mr Jenrick said the fire safety risks in lower-rise buildings are “significantly lower”.
However, Mr Jenrick’s speech made no mention of the costs that leaseholders in unsafe buildings are facing for waking watches, other fire safety defects and increased insurance premiums. In December the government announced a £30m waking watch relief fund, but the Royal Institute of British Architects (RIBA) said at the time it did not go far enough as it only covered blocks above 18 metres.
Conservative MP Stephen McPartland tweeted today: “I am listening to Robert Jenrick’s announcement with my head in my hands. Wondering how he can have got this so wrong. It is a betrayal of millions of leaseholders. It is not good enough. It is shocking incompetence. It is clear the PM has to step in now.”
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Mr Jenrick also announced plans for a “developer levy” to be introduced through the government’s Building Safety Bill, which aims to tackle the issues arising from the Grenfell Tower fire.
“The proposed levy will be targeted and only apply when developers seek permission to develop certain high-rise buildings in England, helping to ensure the industry takes collective responsibility for historic building safety defects,” Mr Jenrick told parliament.
In another new pledge, the government will introduce a new “tax” for the “UK residential property development sector” next year.
“This will raise at least £2bn over a decade to help pay for cladding remediation costs,” the housing secretary told MPs.
“The tax will ensure the largest developers make a fair contribution to the remediation programme in relation to the money they make from residential property.”
Mr Jenrick said there would be a consultation on the policy “design” in “due course”.
Latest official figures show that 165 residential blocks and publicly owned buildings still have Grenfell-style aluminium composite material cladding three and a half years after the tragedy, which killed 72 people. Of these, 120 have started remediation and 28 have a “plan in place”, according to the Ministry of Housing, Communities and Local Government.
However, the figures do not cover blocks covered in other types of dangerous cladding, such as high-pressure laminate.
Overall, estimates suggest that there are around 240,000 flats in total with dangerous cladding, which equates to approximately 650,000 people.
Housing associations are feeling the financial implications of the cladding crisis, particularly in London.
Last month it was revealed that members of the G15 group of the capital’s largest associations are expected to spend nearly £3bn over the next decade to make safe buildings with dangerous cladding. Clarion alone said last summer it expected to spend £100m over the next five years.
Following today’s initial announcement, Mr Jenrick answered questions from a range of MPs in which he suggested some housing associations may have to re-think their plans for new affordable housing.
Asked about support for councils and housing associations around cladding remediation, he said funding had been given to councils and social landlords "who cannot fund this themselves".
But he added: "There are choices at every turn in this and that in itself will have consequences and make it harder for those housing associations to invest in more affordable and social housing or other important aims like making those buildings more energy efficient to meet our climate obligations."
Inside Housing, the sister title of Social Housing, has been running a campaign – End Our Cladding Scandal – in an effort to urge the government to do more to address the problems around unsafe buildings. National media outlets, including The Sunday Times, have also been pushing the government to act through campaigns.
Sector reaction
Kate Henderson, chief executive of the National Housing Federation, said: “This additional funding and reconfirmation of the government’s commitment to building safety is hugely welcome.
“Unfortunately, there are still people in buildings with safety issues who will still face costs. It is good that the government is trying to make these costs manageable for leaseholders, but overall we do not think it is right that leaseholders should pay for any failings of unfit building regulations.
“We are still very concerned about the impact of covering remediation costs on social housing providers and their residents; people who are so far forgotten in this crisis and for whom there is no funding.
“Not-for-profit social housing providers estimate they will have to spend in excess of £10bn to make all their buildings safe.
“This money is being diverted away from providing services and maintaining the homes of people in the lowest incomes in this country, as well as building new affordable homes for those in need.
“We are supportive of anything that aims to recover costs from those responsible and will look forward to seeing the detail of a new development levy.
“It is important that any levy does not simply get passed on, increasing the cost of affordable homes that not-for-profit housing associations purchase from developers, and future homes bought by individuals on a shared ownership basis.”
Gavin Smart, chief executive of the Chartered Institute of Housing (CIH), said: “We welcome the additional £3.5bn for the replacement of unsafe cladding on high-rise residential buildings. This new money will provide much-needed certainty for leaseholders of high-rise accommodation, who were concerned about how to pay for this work.
“But sadly it will not be enough. In fact replacing all the unsafe cladding across the social and private rented sector in England will cost around £15bn.
“The funding announced today will also only cover cladding on buildings over 18 metres. That really should be extended to apply to all buildings with unsafe cladding, whatever their height.
“We need more details on the proposal to introduce long-term loans for leaseholders who live in buildings between 11 and 18 metres. While it caps repayment at £50 per month, it is unclear whether the total amount will be capped. In any case it is unlikely that this scheme will deal with the pressing issue of leaseholders finding themselves in negative equity right now.
“It is disappointing that today’s announcement does not address the costs associated with the additional remedial work, in addition to replacing the unsafe cladding, required to make buildings safe now.
“This is estimated at more than £16bn. The government needs to address this is as a priority, as it is not fair that these costs should be passed onto leaseholders.”
A spokesperson for G15 landlord L&Q said: “L&Q welcomes the news that more money is being made available for the remediation of dangerous cladding and looks forward to receiving further clarification on today’s announcements.
“However, there is still a lot of work to do to make all affected homes safe, as this is about more than just removing and remediating cladding, and we recognise that many of our affected leaseholders will be disappointed with today’s announcements.
“L&Q has committed £250m to building safety works and launched one of the UK’s largest building safety inspection programmes. We have already protected leaseholders from over £20m of costs, by not charging for waking watch and fire detection systems.
“As a registered charity all of the money we make is reinvested back into our social mission. We would therefore welcome further government support to protect all affected leaseholders and housing associations’ ability to continue investing in much-needed social homes.”
Mark London, partner at Devonshires, said: “This will come as welcome news for leaseholders who are facing the prospect of having to contribute towards the cost of removing unsafe cladding.
“However, the additional funding only applies to buildings over six storeys or 18m in height – subject to the caveat that some types of external wall system may yet be excluded from the building safety fund. For those in buildings of four storeys or less they are on their own.”
Andrew Southern, chair of property developer Southern Grove, said: “Taxing developers, most of whom weren’t responsible for the cladding crisis, is just laughable.
“Why should a company that has never installed dangerous cladding, and perhaps never built high-rise blocks in the past, be tarred with the same brush and penalised when they’re no more responsible for this scandal than those in other sectors building cars, running our hospitals and educating our children.
“This sort of regressive tax will only stagnate housebuilding, which is the exact opposite of what the UK needs. By applying it only to the largest developers building the tallest buildings, it will also disincentivise the creation of housing in the high-density areas that are badly in need of new stock.”
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