Housebuilders will pay £5bn to fix faults with new-build homes

Housebuilders will pay £5bn to free leaseholders trapped by the cladding scandal that emerged in the wake of the 2017 Grenfell fire.

Under a new agreement drawn up by housing secretary Michael Gove, housebuilders will collectively pay a minimum of £2bn to fix fire safety problems in their own buildings and will contribute a further £3bn via an extension of a tax on new homes.

So far 35 of Britain’s 53 biggest builders have pledged to fix problems in all buildings that are more than 11 metres high and which they have had a role in developing in the last 30 years.

They will pay £2bn to fix problems in their own blocks and will refund any taxpayer cash that has been used for works so far via government grants such as the building safety fund.

Housebuilders will then also contribute £3bn over a 10 year period through a tax on all new residential buildings in England.

Previously, this building safety levy was only going to be charged on new high rise buildings. Under the initial terms, it was expected to raise £2bn over 10 years.

The money from building safety levy will be used to fix cladding on buildings between 11 metres and 18 metres in height, where the responsible party cannot be identified or forced to act by law.

This cash will be in addition to the £5.1bn building safety fund – a pot of government funding that covers the costs of cladding remediation for blocks more than 18 metres in height, which do not have an accountable builder.

But there is still a question mark over funding for non-cladding works in so-called “orphan” blocks, where the developer no longer exists.

Martin Boyd, of the Leasehold Knowledge Partnership, a charity, said: “We will watch to see if the Government announces protections for these blocks soon. If not, these are the buildings at the bottom of the Government’s waterfall of recovery protections. It would be very disappointing if those at the very bottom of the waterfall were the only ones left without a lifeboat.”

Mr Gove warned builders who did not sign up for the pledge will be blocked from the planning system and government funding. He said: “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 the industry to account, and under our new measures there will be nowhere to hide.”

Liam Spender, of End Our Cladding Scandal, a campaign group, said: “Today’s agreement calls for intensive supervision by the Government. If that does not happen then this agreement will not work.

“Until buildings are fixed people will still be paying for waking watches and higher insurance premiums. That is money they will not get back, even with today’s announcement.”

The Government has also told cladding and insulation manufacturers they must accept their share of responsibility for the crisis and come up with a proposal to contribute to the costs.

Laws proposed in February will protect leaseholders from paying for any cladding related defects. The costs of repairing non-cladding related defects, in instances where a responsible party cannot be identified, will be capped.

All leaseholders qualify for these protections on their main residence, if they live in an affected property. But the protections do not extend to investors with large portfolios. If leaseholders own more than three properties, they will not be protected except for their main residence.

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