The UK government’s plan to spend £5bn replacing unsafe cladding on homes and buildings across the UK, while introducing a developer levy and a residential property development tax, has been widely derided by householders and industry figures alike.

The announcement came amid growing pressure on the government, which has so far allocated just £1.6bn to address building safety problems that have emerged in the wake of the Grenfell Tower tragedy, which MPs have estimated will take around £15bn to fix.

Housing secretary Robert Jenrick’s resulting Commons announcement today (10/2/21) of an extra £3.5bn, to add to the £1.5bn already flagged up, would see the government fully fund the cost of replacing unsafe cladding for all leaseholders in residential buildings 18 metres (six storeys) and over in England.

However, leaseholders in lower-rise buildings between 11 and 18 metres still face having to take a long-term government backed loan to pay for cladding removal, though ministers say no leaseholder will ever pay more than £50 a month towards the removal of unsafe cladding. 

The housing secretary also announced plans to introduce a ‘Gateway 2’ developer levy. The proposed levy will be targeted and apply when developers seek permission to develop certain high-rise buildings in England. In addition, a new tax will be introduced for the UK residential property development sector by 2022. This, say ministers, will raise at least £2bn over a decade to help pay for cladding remediation costs. 

The government is also working with industry to reduce the need for EWS1 forms, preventing leaseholders from facing delays and allowing hundreds of thousands of homes to be sold, bought, or re-mortgaged once again.

Housing secretary Robert Jenrick said: “This is a comprehensive plan to remove unsafe cladding, support leaseholders, restore confidence to this part of the housing market and ensure this situation never arises again. Remedying the failures of building safety cannot just be a responsibility for taxpayers. That is why we will also be introducing a levy and tax on developers to contribute to righting the wrongs of the past.

“These measures will provide certainty to residents and lenders, boosting the housing market, reinstating the value of properties and getting buying and selling homes back on track. We are working with lenders and surveyors to make this happen.”

Bankers including Barclays, Nationwide Building Society, Lloyds, Santander, NatWest and HSBC welcomed the proposals as a confidence boost for the housing market, but enthusiasm was in short supply elsewhere.

Stephen McPartland, one of the Conservative MPs most vocal on the need for government help for leaseholders affected by the cladding scandal, was not impressed by the £3.5bn rescue package. 

The MP for Stevenage tweeted: “I am listening to Robert Jenrick's announcement with my head in my hands. Wondering how he can have got this so wrong. It is a betrayal of millions of leaseholders. It is not good enough. It is shocking incompetence. It is clear the PM has to step in now. The statement from Robert Jenrick is all smoke and mirrors. He is very careful to just state cladding. No mention of fire safety defects, waking watches or excessive insurance premiums which are often the main costs for millions of leaseholders.”

Katherine Metcalfe, legal director at Pinsent Masons, said: “The government has been under considerable pressure to alleviate the burden on homeowners but the £3.5bn of funding announced today is unlikely to be sufficient to meet the cost of remediating all buildings with unsafe cladding. The Housing, Communities and Local Government Committee has estimated the cost to be almost £15bn.

Labour said the measures did not help fix fire safety problems not related to cladding that had emerged after the Grenfell Tower disaster, and that by offering loans rather than grants on shorter buildings it denied justice to thousands of people. Shadow housing secretary Thangam Debbonaire said: “As a result of government choices, three-and-a-half years after the Grenfell tragedy, hundreds of thousands of people are trapped in unsafe homes. Today’s announcement is a repeat of undelivered promises made a year ago. 

“At every stage, the government under-estimated the problem. Delays caused it to grow. The government still doesn’t know how many buildings are unsafe, where they are or what danger they pose. Until we have answers to these basic questions, the government will continue to make mistakes. Offering piecemeal solutions that have to be updated when they don’t deliver.

“Government ministers have now promised 17 times that leaseholders will not bear the cost of fixing a problem they didn’t cause. Many will be listening to the housing secretary’s remarks today. The government has betrayed their promise that leaseholders wouldn’t pay for the building safety crisis. The government has chosen to pile financial ruin on them. This is an injustice.”

The news comes as housebuilder Persimmon said it was allocating £75m to address potential fire safety issues identified in 26 blocks built by the group, including nine high-rises above 18m in height and 17 smaller buildings. The firm said the legal responsibility for fixing the problems remained with the building owners but that “if a building owner fails to step up and accept their responsibilities, Persimmon stands ready to provide the support necessary to make sure the work is done”.