An agreement between the Government and 35 major developers will see £5 billion committed from industry towards addressing the building safety scandal, the Department for Levelling Up, Housing and Communities (DLUHC) has announced.
£2 billion of this has been committed directly from the 35 developers to fix their own buildings, while the remaining £3 billion will come from an extension to the Building Safety Levy, which the department says will “force industry to pay and protect innocent leaseholders”.
Under the new agreement, which will become legally enforceable, the homebuilders have pledged to fix all buildings over 11 metres that they have played a role in developing in the last 30 years.
For the companies yet to make the pledge, the Secretary of State 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.
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.
New proposed laws, announced in February under the Building Safety Bill, will ensure qualifying leaseholders are protected from the costs of historical building safety defects, including total protection against cladding costs.
Levelling Up Secretary Michael Gove said: “Today marks a significant step towards protecting innocent leaseholders and ensuring those responsible pay to solve the crisis they helped to cause.
“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 commits developers who have signed up to legally binding contracts, and to implement their promises as soon as possible.
According to the DLUHC, the detailed agreement confirms developers will:
The Government is introducing new powers that could be enforced on a developer should they breach the agreement, as well as on any remaining companies who fail to sign up. These new powers would allow the Secretary of State to block those who refuse to sign from building and selling new homes.
The Government has also noted that cladding and insulation manufacturers are yet to accept their share of responsibility and come forward with a proposal. 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.
Placed under Clause 57 of the Building Safety Bill, the Building Safety Levy is a new levy on developers, which is designed to contribute towards fixing historical fire safety defects such as unsafe cladding.
It applies to developers making an application to the Building Safety Regulator for building control approval – the new Gateway Two process to be introduced in building regulations, which takes place before building work starts. Those covered within Gateway Two will be residential buildings or care homes over 18m or seven storeys – with subject to exclusions.
The levy rate has yet to be confirmed at the time of writing, with an ongoing consultation process designed to assess this, though it may vary over time.
Find out more about the Building Safety Levy, here.
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