The Department for Levelling Up, Housing and Communities has given a six-week deadline for developers to sign the legal agreements that commit them to pay for unsafe building repairs, threatening that companies who don’t sign and comply with the terms of the contract will face ‘significant consequences’.
As a response to the Grenfell disaster in 2017, the government notes that the contracts will protect thousands of leaseholders living in hundreds of buildings across England, which would otherwise face costly repairs for safety defects, including non-cladding related issues.
Legislation will also be brought forward in the spring to give the Secretary of State powers to prevent developers from operating freely in the housing market if they fail to sign and comply with this remediation contract under a new Responsible Actors Scheme (RAS).
Under the contract, developers will commit an estimated £2 billion or more for repairs to buildings they developed or refurbished over the past 30 years. This means that together with the Building Safety Levy, the industry is directly paying an estimated £5 billion to make their buildings safe.
The contract also requires developers to reimburse taxpayers where public money has been used to fix unsafe buildings.
This follows Secretary of State for Levelling Up, Housing and Communities Michael Gove demanding developers are held accountable, which led to public pledges from 49 of the country’s leading developers that they would take responsibility to fix their own buildings.
Michael Gove said: “Today [30 January] marks another significant step towards righting the wrongs of the past and protecting innocent leaseholders, who are trapped in their homes and facing unfair and crippling costs.
“Too many developers, along with product manufacturers and freeholders, have profited from these unsafe buildings and have a moral duty to do the right thing and pay for their repair.
“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.
“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.”
Mr Gove 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.
This follows confirmation from six major lenders that, from earlier this month, they will once again consider mortgage applications on properties that are covered by the leaseholder protections in the Building Safety Act, or where the building is eligible for a government or developer remediation scheme.
