Government Sets Out New Plan To Protect Leaseholders And Fix The Cladding Crisis

Thousands of homeowners across England have been unable to sell their homes due to the ongoing cladding crisis since the Grenfell Tower tragedy. However, the issue could finally be resolved as the Government ramps up to tackle the cladding scandal whilst ensuring leaseholders are protected.

On the 10th January 2022, the Secretary of State at the Department for Levelling Up Housing and Communities, Michael Gove told MPs that he would ensure leaseholders would not have to pay to fix unsafe cladding on all residential buildings above 11 metres and developers have been given two months to agree a fully-funded plan of action on fixing hazardous cladding on buildings.

Gove insisted; “innocent leaseholders must not shoulder the burden,” and developers, contractors and cladding material suppliers who refuse to pay for the cladding repairs will face ‘commercial consequences’ such as tax hikes, expulsion from the Help to Buy scheme and legal action.

Gove's four-point plan to reset the Government’s approach:

1. Opening the next phase of the Building Safety Fund to drive forward taking dangerous cladding off high-rise buildings, prioritising the government’s £5.1 billion funding on the highest risk buildings.
2. Those at fault will be held properly to account: a new team is being established to pursue and expose companies at fault, making them fix the buildings they built and face commercial consequences if they refuse
3. Restoring common sense to building assessments: indemnifying building assessors from being sued; and withdrawing the old, misinterpreted government advice that prompted too many buildings being declared as unsafe
4. New protections for leaseholders living in their own flats: with no bills for fixing unsafe cladding and new statutory protections for leaseholders within the Building Safety Bill

Gove has written to developers to convene a meeting over the next few weeks, and report back before the House rises at Easter with a fully funded plan of action including remediating unsafe cladding on 11-18m buildings. Should industry not come to the table and agree to a solution, the Government will be forced to impose one. In a bid to provide more transparency, leaseholders will also soon be able to access a new portal which will show them the status of their building’s application to the Building Safety Fund. Alongside an additional £27 million spent on installing fire alarms in all high-risk buildings to keep residents safe and end the dreadful misuse of costly waking watch measures, which are usually paid for by leaseholders.

Clauses in the Building Safety Bill will allow the government to introduce a levy on developers of high-rise buildings, building on the 4% tax on the largest most profitable developers, which was announced in this year’s Budget and expected to raise at least £2 billion over the next 10 years to help pay for building safety remediation.

Israel Moskovitz, property investor, expert and founder of Avon Group, said of the announcement: “We were pleased to hear the government’s latest announcement on the issue of cladding. It is encouraging that proper plans are to be put in place to reduce ambiguity and ensure that the costs of fixing dangerous cladding isn’t put on leaseholders and companies who had no control over the building process."

"This cladding crisis has gone on for far too long, and it is only right that the government is now finding a way to support those in buildings under 18.5m too and taking action to raise £4bn to make affected buildings safe. This should help residents across the country live in safe conditions without footing enormous bills."

He added: "However, it is essential that the government also address funding for the building safety defects not mentioned in this announcement such as defective fire doors, wooden balconies and construction defects."

If you are affected by the cladding scandal and unsure how to best move forwards, drop our colleagues at Mortgage Scout an email at hello@mortgagescout.co.uk or call 0800 1444 744 . Mortgage Scout can provide guidance on lending and mortgages in specific circumstances, as some lenders will be cautious regardless of the new guidance introduced.

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