The government has issued developers with legally binding contracts that will commit them to pay for the repair of unsafe buildings.
Under the contract, developers will commit an estimated £2bn or more for repairs to buildings they developed or refurbished over the past 30 years. This means that, together with the Building Safety Levy, industry is directly paying an estimated £5bn to make buildings safe.
The contract also requires developers to reimburse taxpayers where public money has been used to fix unsafe buildings.
The Department for Levelling Up, Housing and Communities has set a six-week deadline for compliance, and warned that companies who fail to follow through will face “significant consequences”.
Legislation will be brought forward in the spring to create a Responsible Actors Scheme (RAS), giving levelling up secretary Michael Gove powers to prevent developers from from carrying out development and from receiving building control approval if they fail to sign or adhere to the terms.
The department will also take action to ban managing agents and freeholders from taking commissions when they take out building insurance. This is in response to a report from the Financial Conduct Authority that suggested commissions make up almost a third of premiums.
The government will also bring in further measures to make service charges more transparent and empower leaseholders who want to challenge their bills.
The issuing of the contracts follows Gove’s demand for developers to be held to account, which led to public pledges from 49 of the country’s leading developers that they would take responsibility to fix their own buildings, which will now be turned into legally binding commitments.
“In signing this contract, developers will be taking a big step towards restoring confidence in the sector and providing much needed certainty to all concerned,” Gove said. “There will be nowhere to hide for those who fail to step up to their responsibilities – I will not hesitate to act and they will face significant consequences,” he added.
Mick Platt, director of the Residential Freehold Association (RFA), commented: “The RFA has been calling for tougher legislative action on developers for some time and so we welcome the six-week deadline for them to commit to fix buildings where they were responsible for fire safety defects. But there remain serious issues with the government’s current approach toward building safety, including significant ongoing complications which are preventing building owners from accessing government funding for repairs.
“The announcement also doesn’t rectify the fact that many unsafe buildings don’t have a recognised developer to draw funding from. This means freeholders, and potentially leaseholders – neither of whom contributed to this crisis – could still end up having to fund certain projects. The government’s slow movement on funding means currently only a trial exists for funding repairs to these properties, meaning more residents will unfairly be stuck in unsafe buildings for longer.
“If Mr Gove is serious about ensuring those to blame are held to account for fixing this problem, then he will revisit the current policy which passes costs onto leaseholders and freeholders who played no part in the creation of this crisis including seeking legally binding commitments from the cladding manufacturing industry who should also provide funding for remediation.”