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£3.5 billion and loans announced to fix cladding scandal

More money announced to fix cladding crisis, but burden on homeowners will last years as they are saddled with loans.

3 minute read

cladding scandal

Housing Secretary Robert Jenrick yesterday announced an “unprecedented” £5 billion investment in building safety, including a new £3.5 billion to fully fund the cost of replacing unsafe cladding for all leaseholders in residential buildings 18 metres (6 storeys) and over in England. This is in addition to £1.6 billion pledged last year.

But, for lower-rise buildings below 18 metres with dangerous cladding, the government has pledged only loans for leaseholders with repayments capped at £50 per month “or far less.” This has not been welcomed by thousands of homeowners stuck in unsafe buildings.

The government has also said it will claw back some of the costs through new taxes on developers. This will raise at least £2 billion over a decade to help pay for cladding remediation costs. The tax will ensure that the largest property developers make a fair contribution to the remediation programme, reflecting the benefit they will derive from restoring confidence to the UK housing market. Details are to follow.

What’s the issue?

Since the Grenfell Tower fire on June 14 2017, 176 private residential buildings were discovered with similar, dangerous cladding systems.

While money had been provided for remedial work on social housing blocks in the following months, there was no funding to remove this material from private buildings.

This has resulted in the cost being passed to leaseholders who continue to face the double threat of financial ruin and living in a fire trap.

Mid way through 2020, the government finally announced its £1.6 billion building safety fund and remedial work and said recently that work was  “either completed or under way” on 95 per cent of the residential high-rises identified as having Grenfell-style flammable cladding.

But an estimated 700,000 people are still living in blocks with flammable cladding. Many of the affected blocks have round-the-clock fire patrols – ‘waking watches’ – funded mostly by collectives of flats owners. And homeowners are unable to sell their flats.

What’s wrong with this new proposal of increased funds, a tax on developers and loans for homeowners?

While a larger fund is welcome, campaigners say it still falls short of the £15 billion required.

There has been a backlash from flat owners in 80,000 medium-rise apartment blocks, between 11 and 18 metres tall, who would only be offered loans to remove cladding.

Flat owners in these medium-rise blocks will have to make loan repayments capped at £50 a month. Costs would be passed on to anyone purchasing the flats, making them instantly unattractive to prospective home buyers.  It would take 66 years to pay off the average £40,000 debt interest-free.

There is also no new funding to fix other structural fire safety defects such as missing fire barriers and wooden balconies which cost the average flat owner £25,000. An estimated 70% of buildings with unsafe cladding have other fire safety defects.

Here at the HomeOwners Alliance, we don’t think leaseholders should have to cover the costs – through a loan or otherwise – for any remediation work while cladding firms, developers and freeholders feel none of the repercussions. It’s not fair to treat leaseholders differently: those who live in 18+ metre high rises do not have to pay; yet those who live in slightly smaller blocks will be saddled with paying an extra £600 a year in loans that will be passed on to future owners.

We also don’t think a tax, where developers simply cream-off the very top of their profits and carry on unimpacted by the cladding scandal, while individual homeowners suffer the financial burden and worry for years to come, is a fair and proportionate response.

What’s the solution?

The End Our Cladding Scandal campaign argues that the government should not force thousands of residents to bear the costs of a cladding scandal that they did not create. The government needs to provide an upfront fund to pay for repairs, funded by those responsible for the cladding scandal.

In the beginning, the government urged freeholders to do the right thing and pay for the remedial work needed to make these buildings safe. This fell on deaf ears. The government could do more now by requiring freeholders to pay now or else they lose the freehold and the title will be passed to the leaseholders.

If you agree, put your name to the latest petition here.


Leave a comment (7)* Required

  1. Janet CatonJanet Caton

    Leaseholders do not want all taxpayers to foot the bill. They want the government to intervene to make sure developers and freeholders are held responsible and pay for all fire risk remedial work, not just cladding, through sufficient taxes levied on them alone.

  2. PaulinePauline

    I just need the managing agent to act on the fire risk assessment that states get the wood cladding checked if it is a risk would rather pay than not be able to mortgage the property. This is original cladding on a 4 storey building that has been there years never an issue until the new cladding that has caused all the problem

  3. ValerieValerie

    We bought the leasehold of a property which had passed building regulations, received a 10 year building guarantee and insurance cover, was approved by lender’s surveyors and passed building survey. We didn’t open up the walls (which belong to the freeholder) to see what they were made of. Now we are told we will have to pay to right this wrong. Minister tells us “caveat emptor”. Outraged.

  4. S JonesS Jones

    Why in God’s name should ordinary taxpayers be saddled with the cost of repairing or replacing these buildings? There is far too much of this free money culture at the moment. The government has no money of its’ own, it’s all our taxes in various forms. I object to dishing out money for these repairs when there is child poverty and veterans sleeping rough on the streets.

  5. Robin WilsonRobin Wilson

    This a perfect example of the iniquitous leasehold system. If a freeholder flat dweller were faced with replacing cladding this would have been covered by their building insurance. The very wealthy freeholders of theses high rise buildings should pay , absolute travesty to place the financial burden on leaseholders. Leasehold must be abolished.

  6. Raj JoshiRaj Joshi

    You built it, it doesn’t work, stopped working or it’s dangerous so you repair it or deal with it. We take this for granted with everything else we buy from toys to cars so why are buildings different unless it might have something to do with the powers that be that allowed it to be passed, or did nothing and have done nothing whilst lives have been lost. Deal with this now!

  7. Sandeep Singh SahiwalSandeep Singh Sahiwal

    I fully support the HOA campaign for all properties to be included in the Government scheme

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