Housing secretary Robert Jenrick announced a £3.5bn fund to help remove unsafe cladding from high-rise buildings over 18m. Meanwhile, leaseholders of shorter properties will pay towards construction through a government-backed loan with repayments capped at £50 a month.
Leaseholders already paying the price
Dina Bhudia, managing director of P2M Asset Management, said it was unfair that some leaseholders had to pay anything at all, as they had already paid the price by purchasing a potentially unsafe home they were unable to sell or remortgage on.
She also said an extra loan to pay could affect affordability for some.
Bhudia added: “The government should continue with what they have done and support funding [for all]. Leaseholders are the ones at risk and they have to put up with all the inconvenience of it all.”
David Hollingworth, associate director at London and Country, said the fund would “invigorate” options for those financially responsible and end the stand-off of who should pay for what.
He said: “It’s good this has put it back on top priority because it’s become such a problem for so many people – we couldn’t just wait for it to resolve itself. We can’t keep going on wondering who’s going to foot the bill for this when people are living in unsafe buildings.
“People will wonder why they have to foot any of the bill, but at least it provides structure and availability to what will hopefully be cheap funding to enable them to do something about cladding that is actually deemed unsafe.”
Brokers added the announcement did not do enough to speed up the remediation process or create any urgency to remove cladding.
Last month, building safety minister Lord Greenhalgh said developers which had not begun remediation works would face “further action”. However, no deadline has set been for either those who have begun to rectify the issue or those still yet to start.
Bhudia said this could create a “vacuum” of properties which are unable to sell due to a lack of progress.
“The mainstream, bigger developers – if they even have the issue with cladding – will react because of their branding. The mid-sized and smaller developers, especially ex-council, will see difficulties.
“And then the question is, what will they replace the cladding with? Where does planning come into it – will they have to go through it again? The original cladding would have been approved by old standards,” she added.
Clarity still needed
Brokers also said a government-backed loan being made available to leaseholders living in buildings under 18 metres suggested such properties were also a risk and raised questions as to why they had not been included in the overall guidance.
Rob Gill, managing director of Altura Finance, said: “People living in buildings under 18 metres either need to be included in the measures or urgently clarify the rules so they don’t need to be. Not leave them in limbo.
“There are some buildings that fall under the 18 metres threshold which still have difficulties selling.”
However, he acknowledged that the latest measures could remove lender hesitancy towards buildings suspected of or confirmed to have unsafe cladding as it would provide confidence that something was being done.
He said: “As far as lenders are concerned, they need a solution or at least something to be underway before they can lend.”
A tax and levy on the property development sector were also introduced in the announcement, with the tax expected to raise £2bn to fund the correction of unsafe cladding.
Andrew Southern, chairman of property developer Southern Grove, said it was “laughable” to tax all developers, some of whom would not have been responsible for the the use of dangerous materials.
He said: “Why should a company that has never installed dangerous cladding, and perhaps never built high–rise blocks in the past, be tarred with the same brush and penalised when they’re no more responsible for this scandal than those in other sectors building cars, running our hospitals and educating our children.
“This sort of regressive tax will only stagnate housebuilding, which is the exact opposite of what the UK needs. By applying it only to the largest developers building the tallest buildings, it will also disincentivise creation of housing in the high density areas that are badly in need of new stock.”