Michael Gove’s Letter to Residential Property Developer Industry to Fund Unsafe Cladding Remediation

Secretary of State for Levelling Up, Michael Gove, has written to the residential property developer industry to agree financial contributions to fund the remediation of unsafe cladding on buildings between 11 and 18 metres high, which is currently estimated to be around £4bn.

In his letter, Mr Gove has given residential developers a deadline of early March 2022 and asks companies to agree to:

• make financial contributions to a dedicated fund to cover the full outstanding cost to remediate unsafe cladding on 11-18 metre buildings, currently estimated to be £4 billion;
• fund and undertake all necessary remediation of buildings over 11 metres that they have played a role in developing (ie both 11-18m and 18m+). Any work undertaken by developers themselves on 11-18 metre buildings will reduce the total cost of cladding remediation that has be paid for through the proposed 11-18 metre building fund;
• provide comprehensive information on all buildings over 11 metres which have historic safety defects and which they have played a part in constructing in the last 30 years.

He calls on the industry to enter an open and transparent dialogue with the government to hear their proposals, starting with a roundtable that will include 20 of the largest housebuilders and developer trade bodies.

If a solution is not agreed by early March, Mr Gove says that he is prepared to take “all steps necessary” to secure the funds from companies. Such steps include restricting access to government funding and future procurements, the use of planning powers, pursuing firms through the courts and the imposition of a “solution in law if needs be”. Such solution is intended to be a reference to new targeted tax measures aimed at the residential property industry.

The government will announce a decision on which companies are in scope for providing funding contributions following discussions with the industry but expect it to cover all firms with annual profits from housebuilding at or above £10m.

Whilst an indication has been provided, it is not clear at this stage what "all steps necessary" will involve in practice. Further details are needed for clarity, which are likely to become available in future announcements.