On 10 February 2021, the Housing Secretary Robert Jenrick unveiled a five-point plan intended to provide reassurance to homeowners affected by the cladding crisis.
The plan includes making an additional £3.5 billion available for improving building safety. This is on top of £1.6 billion previously pledged for cladding and some additional funds earmarked for a new Building Safety Regulator.
The plan also includes steps to recover some of the public funding through a tax on high-rise residential developments.
This is predicted to raise £2 billion over the next 10 years, however it is impossible to scrutinise this figure in the absence of the government's calculations.
Ultimately, this tax will either come from reduced profit margins for developers, which will make investment less appealing, or through increased housing costs, which will be borne by leaseholders.
At a time when the construction industry is feeling severe effects from the Covid-19 crisis, and the economic issues caused by both the pandemic and Brexit are having unpredictable effects on the housing market, this will not be welcome news to developers or purchasers.
The new scheme suffers from the same seemingly arbitrary restrictions as previous funding allocations, such as:
- Grants are limited to buildings over 18 metres or six storeys in height.
- Loans will be provided to leaseholders of smaller buildings with a cost to each individual capped at £50 per month – however £600 per year is a substantial expense for many apartment owners and will reduce marketability of the properties.
- Perhaps more seriously, despite the fact there were multiple failings with fire safety at Grenfell Tower, including insufficient fire breaks, funding is only being extended for cladding remediation to the exclusion of other safety measures.
- Where investigations show multiple fire safety issues, leaseholders retain responsibility for all other works.
To add further uncertainty, the Barnett Formula is being used to release funding to the devolved governments in Northern Ireland, Scotland and Wales. The devolved governments are free to distribute funding as they see fit, which could lead to a postcode lottery as to what building works will be paid for.
There are currently no timescales for release of funds or for safety works to be completed. The lack of suitable inspectors is continuing to delay surveys and many mortgage companies now require EWS1 fire safety certificates, which cannot always be obtained in a timely manner.
The greatest frustration for developers and leaseholders alike is the government's assertion with each round of funding that there is a cap, which will not be increased.
This is despite mounting evidence that the scale of the problem and cost of solving it remains unknown, plus the fact that the government has acknowledged building safety is an absolute priority in the wake of the Grenfell Tower tragedy.
It remains to be seen if the various building remediation schemes will be extended again, especially as this crisis is likely to take years – if not decades – to resolve.
This article was authored by Helen Andrews, construction partner at Fieldfisher Birmingham.
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