Developers pledge £5bn to fix unsafe high-rises

(Image: KHL)

Leading housing developers in the UK are to pay up to £5 billion to fix unsafe high-rise buildings. 

The industry sector has agreed the funding commitment with the Government, in a bid to address the building safety scandal, which ignited in the wake of the Grenfell Tower tragedy in 2017.

Described as a “victory for leaseholders”, over 35 of the UK’s major housing developers have agreed to pay a minimum of £2 billion to fix all unsafe buildings over 11 metres tall, that they have been involved in constructing over the past 30 years.

Leading housebuilders have also pledged to sign legally binding contracts to commit a further £3 billion (over the course of ten years), through an expansion of the Building Safety Levy - which will be “chargeable on all new residential buildings in England”.

The agreement, along with new laws proposed in February under the Building Safety Bill, aims to protect leaseholders from having to pay to correct historical safety defects on their properties.

Levelling Up Secretary Michael Gove said, “Today marks a significant step towards protecting innocent leaseholders and ensuring those responsible pay to solve the crisis they helped to cause. I welcome the move by many of the largest developers to do the right thing.”

Under the agreement, which will soon become legally enforceable, developers will act as quickly as possible to fix buildings and refund any money they have already received from leaseholders towards those costs.

They will also keep leaseholders and the Government regularly updated on works to rectify safety issues, introduce new building safety guidance and adhere to a new independent dispute resolution process.

“But this is just the beginning,” said Gove. “We will do whatever it takes to hold industry to account, and under our new measures there will be nowhere to hide.”

The Government will also introduce “new powers that could be enforced” on any developer in breach of the agreement, “as well as on any remaining companies who fail to sign up”.

While developers such as Avant, Barratt, Berkely, Churchill Retirement, Davidsons, Hill Group, Gleesons and Taylor Wimpey are among those that have agreed to the pledge, the Government’s negotiations with construction product manufacturers have been slower to materialise into action.

According to the Government, “cladding and insulation manufacturers are yet to accept their share of responsibility and come forward with a proposal”, and none have thus far signed up to match the pledge agreed to by developers. 

In open letter to the sector’s representing body, the Construction Products Association (CPA), Gove thanked the association for its “considerable efforts” to encourage the sector to move forward.

However, he also said the failure of building material manufacturers to make a public funding commitment was “simply not good enough” and warned that he will do “whatever it takes to hold cladding and insulation manufacturers to account”.

Gove said, “It is unacceptable that there has been no clear acknowledgement that actions taken by cladding and insulation manufacturers have contributed to the problem, and that manufacturers have individually and collectively failed to come forward with a proposal for playing their part in addressing it.”

UPDATE: Construction Products Association responds to Gove

In response to the letter, the Construction Products Association (CPA) said that Gove was “wrong to characterise the position of manufacturers as making excuses rather than taking action”.

The CPA drew attention to the fact that several construction product manufacturers had already made public announcements committing “to replacing any defective products at their own cost”, and pointed out that many are already involved in the House Builder’s Remediation programme.

The CPA added, “Our members do understand the urgency of finding a solution and have been working hard with us to try to find a suitable formula.”

“We should stress however that many are troubled by the lack of detail in terms of scope and definitions for the work and the lack of support from valuers, insurers and the mortgage sectors.”

The construction sector organisation also said it was “essential to engage other sectors of the industry in the discussion because in the design, procurement, construction and maintenance of any building there will have been a complex set of interactions leading to the final built asset.”

The CPA explained that, “A significant number of decisions are made that affect the products used (and importantly the products rejected) as well as the groups of products assembled together, the quality of the installation and in some cases the proper maintenance.

“This may radically and crucially change the performance of any individual product. As a result, poor design, procurement, and construction, may lead to ‘safe’ individual materials and products used inappropriately to form a system of components that is either ‘unsafe’ or incorrectly installed, making them ‘unsafe’.”

In closing its response to Gove’s letter, the CPA said that it is continuing its work to reform and instill cultural change across the industry, and that it would offer help and assistance to any new proposals put forward by the Government.