(Bloomberg) —
U.K. property developers must contribute to a 4 billion-pound-fund ($5.4 billion) to fix dangerous cladding on low-rise apartment blocks by March or face new regulation that would force them to pay, Housing Secretary Michael Gove said.
Gove was speaking ahead of a parliamentary statement due on Monday in which he will announce measures to help homeowners still trapped in unsafe and unsellable apartments more than four years after the fire at Grenfell Tower in London, in which flammable cladding materials contributed to the deaths of 72 people.
“We want to say to developers and all those who have a role in recognizing their responsibility that we want to work with them,” Gove told Sky News on Monday. If necessary the government will use the legal and tax systems to get “those who have deep pockets” to pay for dealing with cladding, he said.
The government is trying to draw a line under a scandal around buildings standards that was exposed by the Grenfell tragedy and left as many as 3 million people living in homes with dangerous materials, according to the End Our Cladding Scandal pressure group.
While the government had already committed up to 5 billion pounds to fix the tallest buildings, Monday’s measures will also see homebuilders contributing to the costs of remediation work on buildings between 11 meters and 18 meters tall. Previously, leaseholders in those buildings — of between four and six storeys — had only been promised access to loans to help cover the costs themselves.
If developers do not comply, the government could restrict their access to U.K. funding and future procurements. Using planning powers and pursuing firms through the courts are also options. All firms with annual profits from housebuilding of at least 10 million pounds are expected to contribute, Gove’s department said in an email.
Shares of some homebuilders including The Berkeley Group Holdings Plc and Taylor Wimpey Plc fell more than 2%.
“The previously proposed loan scheme has proved to be impractical,” Stewart Baseley, executive chairman of the Home Builders Federation, which represents private sector developers in England and Wales said in a statement. “We will engage directly with government but any further solutions must be proportionate, and involve those who actually built affected buildings and specified, certificated and provided the defective materials on them.”
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