The Secretary of State for Levelling up, Michael Gove, has unveiled new measures to protect leaseholders from the excessive costs of cladding removal. The measures aim to shift the costs of the removals onto property developers and building owners. Here we will go over what these changes mean and how cladding changes will affect leaseholders and developers.
The changes are to be introduced as an amendment to the Building Safety Bill and states that it is the responsibility of the property developers, not leaseholders, to remove unsafe cladding from buildings. Developers and building owners that do not make efforts to remove unsafe cladding will be faced with sanctions. These include the government now being able to block planning permission and building control sign off for developers on other sites.
In addition to this, the government has said it will apply a new building safety levy to developments. It will have a higher rate for developments that do not find workable solutions to the removal of dangerous cladding. Secretary of State for Levelling up Michael Gove stated that he does not want to use these new measures against developers and wishes for responsible developers to continue to construct the houses people need. However, the powers will be used against developers that do not act responsibly. Developers will also be stopped from using shell companies to hide the identification or tracing of the said developer.
Help is being made available for developers though with the introduction of Cost Contribution Orders. These can be placed on manufacturers who have been successfully prosecuted under construction production legislation. You will need to fill out a building remediation passport to get a cost contribution order for your property. The orders will force manufacturers to pay their fair share for problems caused by selling dangerous defective products. This will be available to building owners and landlords with the power stretching back 30 years to ensure the majority of leaseholders are protected.
Commitments made by Mr Gove in January that leaseholders living in or sub-letting their homes in a building over 11m tall will not have to pay a penny will also be enshrined in the law. This is a massive commitment as some leaseholders were being given bills in excess of £100,000. Developers that still own the building or landlords linked to the developers will be required to pay the full removal. Building owners that are not linked with the developer will also be required to pay the full costs. In the few cases where the building owners cannot pay the full cost of repairs, a cap will be used to prevent leaseholders from being changed excessively. £10,000 for homes outside of London and £15,000 for homes in the capital. Any costs already paid by leaseholders will count towards these caps.
Overall, the government is finally following through with its promise to protect leaseholders from the costs of the cladding scandal. It has clarified who is responsible for removing the types of cladding that caused the Grenfell disaster and what sanctions will be used if the responsible party doesn’t cover the costs of removal.
Please note this topic is being updated regularly by the government, if you are a director for a development and are interested in the funding options offered by the government and developers, we would love the opportunity to work with you. For more information please contact us.