The government has announced that it wants to reset its approach to building safety with a bold new plan to protect leaseholders and make wealthy developers and companies pay to fix the cladding crisis. The move can only be seen as good news for insurers, who have been entangled for several years with owners who want compensation and remedial work payments to be partially met by property insurers. Because of the uncertainty surrounding the future liability and costs of remedial work insurers have been raising premiums on Buildings policies for some apartment owners.
The announcement yesterday should – in theory – lead to more stable assessments as regards the Buildings claims costs in the longer term, although it doesn’t remove the potential fire risks until the cladding work is actually done of course.
Secretary of State for Levelling Up Michael Gove has guaranteed that no leaseholder living in their own flat will have to pay a penny to fix unsafe cladding. Which is a very bold statement for any politician, although it’s worth noting that no promises are being made to Buy-to-Let apartment owners, or commercial landlords owning a portfolio or complete building, even if they were not the original developer of the project.
Following Mr Gove’s letter to industry, the old proposed loan scheme for leaseholders in medium-rise flats will be scrapped, with industry given two months to agree to a financial contributions scheme to fund the new plan, otherwise, if necessary, the government will impose a solution in law.
In addition, a new dedicated team is being established to pursue and expose companies at fault and to force them to shoulder the burden of making buildings safe. The government also wants to cap the `waking watch’ fees which some Property Management companies have been charging after the Grenfell tragedy.
Mr Gove revealed a 4-point plan to reset the government’s approach:
- Opening up the next phase of the Building Safety Fund to drive forward taking dangerous cladding off high-rise buildings, prioritising the government’s £5.1 billion funding on the highest risk
- Those at fault will be held properly to account: a new team is being established to pursue and expose companies at fault, making them fix the buildings they built and face commercial consequences if they refuse
- Restoring common sense to building assessments: indemnifying building assessors from being sued; and withdrawing the old, misinterpreted government advice that prompted too many buildings being declared as unsafe; and
- New protections for leaseholders living in their own flats: with no bills for fixing unsafe cladding and new statutory protections for leaseholders within the Building Safety Bill
Secretary of State for Levelling Up, Michael Gove, said:
More than 4 years after the Grenfell Tower tragedy, the system is broken.
Leaseholders are trapped, unable to sell their homes and facing vast bills.
But the developers and cladding companies who caused the problem are dodging accountability and have made vast profits during the pandemic whilst hard working families have struggled.
From today, we are bringing this scandal to an end – protecting leaseholders and making industry pay.
We will scrap proposals for loans and long-term debt for leaseholders in medium-rise buildings and give a guarantee that no leaseholder living in their own flat will pay a penny to fix dangerous cladding.
Working with members of both Houses, we will look to bring a raft of leaseholder protections into law through our Building Safety bill.
And we will restore much needed common sense on building safety assessments, ending the practice of too many buildings being declared unsafe.
Dame Judith Hackitt, who chaired the Independent Review of Building Regulations and Fire Safety said:
Today’s announcement by the Secretary of State is very welcome and should come as a great relief to the many leaseholders who have felt trapped by the prospect of having to pay for remediating defects to properties which they bought in good faith.
Those who caused the problem now need to step up, take responsibility and show some leadership. This problem has gone on for too long and we need a rapid solution, not months of debate and negotiation leaving innocent leaseholders in further limbo.
The announcement that industry is being put “on notice” follows both the suspension of Rydon Homes, because of its links to Rydon Maintenance, the company responsible for the refurbishment of the Tower, from the government’s Help to Buy Scheme last month, and the welcome decision by Mercedes to end their sponsorship deal with Kingspan.
Read the press release in full here.
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