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Gove confirms government to pause leaseholder cladding loan scheme

  • 09/11/2021
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A controversial scheme which required leaseholders to pay towards the removal of unsafe cladding from high rise blocks has been paused by the government.

Appearing before the housing select committee, Michael Gove (pictured), the secretary of state for levelling up, housing and communities, said he was unhappy with the thinking behind the scheme, questioning why leaseholders should have to pay at all.

Gove said that the government had a responsibility to help leaseholders “who are innocent parties in this” yet are being asked to pay “disproportionate sums when there are individuals in business ‒ some still in business ‒ who are guilty men and women”.

He continued: “I’m still unhappy with the principle of leaseholders having to pay at all, no matter how effective a scheme might be in capping their costs or not hitting them too hard at any one time.”

Gove said he would bring forward new proposals to replace the scheme in the weeks ahead.

Unfair on leaseholders

Gove’s predecessor, Robert Jenrick, launched a £3.5bn cladding fund at the start of the year, which would see the government pay for all cladding to be removed from high-rise builders over 18 metres high. However with smaller buildings, leaseholders would have to pay towards the removal of the cladding through government-backed loans. 

While Jenrick promised that under the scheme leaseholders would not have to pay more than £50 a month, it nonetheless provoked uproar across the industry, with brokers declaring that it was fundamentally unfair.

The continued presence of cladding on high-rise buildings ‒ or even potential presence ‒ has been an obstacle in the mortgage market, with lenders refusing to lend against certain properties, leaving some homeowners effectively mortgage prisoners, unable to sell or even remortgage.

In the Budget, Rishi Sunak, the Chancellor of the Exchequer, announced the introduction of a property developer tax, aimed at raising funds for the replacement of cladding.

Gove was withering about the developers involved in building high rise blocks which have flammable cladding, describing them as “cowboys”.

He continued: “It would seem to me that at the very least developers have to ask whether or not they were engaging in ‘value engineering’, in other words seeking to reduce costs in a way which not just with the benefit of hindsight but at the time people would have known was putting cost reduction ahead of safety.”

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