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Gove warns developers that they must pay to fix unsafe cladding

  • Legal Development 12 January 2022 12 January 2022
  • UK & Europe

  • UK Real Estate Insights

On Monday of this week, Michael Gove gave the residential property developer industry a deadline of early March 2022 to agree a fully funded plan of action to fix the cladding crisis, including remediating unsafe cladding on 11-18m buildings which it is estimated will cost £4bn.

Secretary of State for Levelling Up, Housing and Communities, Michael Gove warned on Monday in a letter to the residential property developer industry that developers have from now until the end of March 2022 to work with Gove’s department to agree a fully funded plan of action to fix the cladding crisis.  This plan of action must, Gove says, be built around clear commitments on the industry’s part to:

  1. Make financial contributions this year and in subsequent years to a dedicated fund to cover the full outstanding cost to remediate unsafe cladding on 11-18m buildings, estimated currently to be £4bn;
  2. Fund and undertake all necessary remediation of buildings over 11m that developers have played a role in developing (ie both 11-18m and 18m+); and
  3. Provide information on historic fire safety defects on buildings over 11m that developers have played a part in constructing in the last 30 years.

Gove has said that he will take all necessary steps to make this happen, including restricting developer’s access to government funding and future procurements, using planning powers, pursuing companies through the courts or, if necessary, imposing a legal solution.

The announcement represents a total change of direction for the Government.  Previous Housing Minister, Robert Jenrick, proposed that leaseholders of 11-18m high buildings be offered low interest loans to pay for unsafe cladding; Gove says that leaseholders should not be landed with the bill.

Developers now face additional costs on three fronts in the form of the new Residential Property Developer Tax, a further levy on high-rise planning applications (both of which the Government already has in the pipeline) and the costs associated with this new plan.

Industry commentators have been quick to point out that the issues surrounding the cladding crisis (and building safety more generally) are complex, that the money is unlikely to be enough and that this new plan does not address the costs of wider fire safety (such as defective smoke ventilation systems etc).  Many predict that this fix, like the battle about who is ultimately liable for the costs of fixing the cladding crisis, will end up in the courts.

All this means that there remains lots of uncertainty: for developers, who must plan for new contingencies; and for leaseholders living in flats with unsafe cladding.

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