UK Construction & Engineering: Cladding Crisis and Latest Government Intervention

By Vijay Bange

There was considerable interest as to what more the Government will do in its effort to tackle the issue of high rise residential buildings with dangerous cladding, and further measures to help the plight of long leaseholders who are facing significant costs to undertake necessary fire safety remedial works.

On Wednesday 10th February, Robert Jenrick, the Housing Secretary announced that in addition to the £1.6bn the Government had pledged last year for removal of dangerous cladding, a further £3.5bn will be set aside. Is this enough to fix what is mooted to be a £15bn problem?

In summary:

  • As before this sum will only apply to buildings that are six storeys or at least 18M in height.
  • So what happens with residential buildings less that 18M? Leaseholders appear to have been left to pay for costs themselves with the offer of loans where repayment on a monthly basis will be capped at £50.
  • Depending on remedial costs the spread for repayment may stretch over a similar period to a long term mortgage.
  • What about Leaseholders who sell? Potentially they have to pay back such loaned sums sooner than the maturity date. Are these loans portable?
  • The sum pledged relates to removal of dangerous cladding only. As such it does not appear to cover costs for rectifying other associated fire safety issues like fire breaks, balconies or insulation, which is an oddity.
  • The Treasury is trying to do a balancing act by stopping short of pledging to deal with all residential buildings with dangerous cladding, and associated fire issues.
  • In an attempt to claw back monies, there will be a tax levied on property developers with high rise buildings as well as a planning levy.
  • This additional taxation it is envisaged will claw back for the Treasury £2bn over a 10 year period.

Those caught up in this issue will no doubt welcome the extra money being made available by the Government, but query whether the measures go far enough. What is clear is that this issue is one that will create ongoing attention given that there is a large number of high rise buildings with dangerous cladding and other fire safety defects awaiting remediation in the UK.  In the midst of a recession, when the government is trying to stimulate the property market, increasing taxes for developers will however be controversial.