Leaseholders no longer have to pay £4bn to fix unsafe cladding

Leaseholders no longer have to pay £4bn to fix unsafe cladding

By Nicky Burridge

The government has asked the housing industry to work together to resolve unsafe cladding on mid-rise homes.

Owners of mid-rise flats with dangerous cladding will no longer have to pay to have it removed from their homes.

The costs will now be passed on to developers and cladding manufacturers, according to the government.  

Michael Gove, secretary of state for Levelling Up, Housing and Communities, published his letter to the building industry on January 10.

In it, he requested that companies and industry bodies work together with the government on a “new deal” to fix the cladding crisis.

They have until early March to agree on a plan to fund and fix unsafe cladding on buildings of around four to six-storeys high.

The estimated cost of work to fix cladding on these buildings is £4bn.

The government is paying for cladding to be replaced on blocks of flats that are above 18m high.

However, buildings of 11m to 18m have not been eligible for government support. 

Several major developers have already stepped up and taken on the responsibility for changing unsafe cladding themselves. 

Gove is now asking all developers to do the same, so that leaseholders are no longer left with large bills to resolve the crisis.

“It is neither fair nor decent that innocent leaseholders should be landed with bills they cannot afford, to fix problems they did not cause,” Gove said.

He has also scrapped an earlier government plan under which leaseholders would have had to take out low interest government loans to pay to fix cladding.

Gove vowed to work with developers and trade bodies to find a solution. But he warned that if the industry didn’t take responsibility, the government would take further action.

Why does £4bn need to be paid to fix cladding?

In June 2017, 72 people died and more than two hundred residents lost their homes in the Grenfell Tower fire in London.

Unsafe cladding and external insulation was later found to have played a part in how quickly the deadly fire spread.

In the wake of the Grenfell tragedy, flammable cladding and other fire safety defects were discovered in hundreds of tower blocks across the UK.

As a result, the government announced plans to remove highly flammable cladding from apartment buildings.

While the government offered support to those living in apartments over 18m high, leaseholders living in flats below 18m were asked to foot the bill themselves, with the help of government-backed loans.

Homeowners in mid-rise properties complained that the situation was highly unfair, particularly as it made their properties unsaleable.

What does Gove’s letter mean for leaseholders?

Gove’s announcement is good news for leaseholders in mid-rise apartment blocks.

Not only will they no longer have to worry about paying to have the cladding removed, they’ll now be able to sell should they wish to.

Some leasehold properties became effectively unsellable due to the discovery of flammable cladding.

Many such homes were down valued by the bank, and became unmortgageable. 

The latest announcement means homes in mid-rise blocks with cladding may soon re-enter the housing market.

This is also good news for the wider property market, as there is currently a shortage of available homes for sale.

Under Gove’s new proposals, leaseholders will also be protected from losing their homes due to historic fire safety costs.

Some residents have spent years paying for onsite fire safety wardens, known as “waking watch”, because their buildings are unsafe.

Those unable to afford these costs could have faced eviction, but Gove’s announcement includes further protections for them.

New statutory protections for leaseholders are also due to be introduced within the Building Safety Bill.

This will give leaseholders a legal right to demand compensation from their building’s developer for safety defects that were up to 30 years old.

What does the cladding news mean for developers?

In his letter, Gove announced new measures to hold developers accountable for shouldering the cost of cladding remediation.

He acknowledged that many developers had already covered the cost of remediation work to their buildings without complaint.

But he warned that housebuilders that didn’t would face commercial consequences.

He said a team would be established to pursue and expose companies that were at fault and make them fix the homes they had built.

In his letter, Gove writes: “I am sure you are as committed as I am to fixing a broken system. 

“I want to work with you to deliver the programme I have set out. But I must be clear, I am prepared to take all steps necessary.

“This includes restricting access to government funding and future procurements, the use of planning powers, the pursuit of companies through the courts.”

What’s it like living in a home with unsafe cladding?

Balcony on a new-build home with plants and greenery

Jenni, 24, lives in Sheffield in a two-bedroom flat that currently has a market value of £0. Unsafe cladding was discovered after she moved in.

"I bought my flat in April 2019. I was a first-time buyer and had been saving through school to get my deposit together. 

It cost me £93,000 and I’d saved a deposit of £15,000. I felt so proud to have been able to buy a place in my early-20s.

Just as Covid-19 hit in 2020, we were given notice by our managing agents that the cladding on the outside of the building was unsafe. 

I’d bought the flat a couple of years after the Grenfell Tower tragedy, so my conveyancers had gone through the process of checking that the flat didn’t have what’s called Aluminium Composite Material (ACM) cladding on it. 

Unfortunately, the government changed its advice on non-ACM cladding in January 2020. 

Safety checks were done just after the law changed and it was found that the entire building where I live is wrapped in unsafe cladding. 

In December 2020, our local fire station inspected our building and found fire safety defects in addition to unsafe cladding. 

The building’s only 14 years old.

We’ve been paying for what’s called a “waking watch”, basically fire wardens who are on site monitoring the building for fire 24 hours a day, seven days a week, ever since.

We need one warden for every two floors, which means paying five people to be there round the clock. 

Collectively, it costs all the leaseholders £15,000 a week. 

Personally, I'm paying £600 a month on waking watch, which is double the cost of my mortgage.”