Developers that fail to pay for cladding fix face ban on selling homes

The government could block developers from selling new homes if they refuse to pay for historical building defects, under new powers in the Building Safety Bill.

The Department for Levelling Up, Housing and Communities (DLUHC) announced that it is to introduce powers that would allow ministers to effectively sanction firms that do not pay their fair share to address the building-safety crisis.

The news comes as the government revealed that at least 35 major developers and housebuilders have so far agreed to contribute up to £5bn for safety repairs.

The DLUHC hailed a “victory for leaseholders”, noting that developers had committed a minimum of £2bn to fix their own historical building defects.

A further £3bn will be sourced from an expansion of the Building Safety Levy.

Under the agreement, which will become legally enforceable, more than 35 of the UK’s biggest homebuilders have pledged to fix all buildings of 11+ metres in height that they have played a role in developing over the past 30 years.

In a thinly veiled threat, the government said that those firms that had yet to sign up “had little time left” to make a commitment.

In a letter published this morning, DLUHC secretary Michael Gove threatened construction-material suppliers with court action, as well as the full use of his ministerial powers, to ensure that they faced “significant commercial and reputational consequences” for not helping to pay for defects in buildings over 11 metres tall.

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.

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

The new scheme will be funded through an extension of the Building Safety Levy that will be chargeable on all new residential buildings in England.

It is expected to raise up to an additional £3bn from developers over 10 years, and would ensure no leaseholder in medium-rise buildings faced crippling bills, even in cases where their building’s developer could not be traced.

Proposed laws under the Building Safety Bill, announced in February, would ensure qualifying leaseholders were protected from the costs of historical building-safety defects, including total protection against cladding costs. Today’s deal establishes that the industry responsible – not innocent leaseholders – will pay.

The government is introducing powers that could be enforced on a developer should they breach the agreement, as well as on any remaining companies that fail to sign up. The new powers would allow the secretary of state to block those that refused to pledge cash from building and selling new homes.

Earlier this month, a slew of developers announced that they were joining the government’s building-safety fund to pay for defects in buildings over 11 metres in height, which up until now had not been covered by the £5bn government building-safety fund.

The new measures are in addition to the developer levy, which came into force in April and is formally known as the Residential Property Developer Tax. The tax is expected to raise about £3bn over 10 years.

Developers that have agreed to pledge money

  • Avant
  • Ballymore
  • Barratt
  • Bellway
  • Berkeley
  • Bewley
  • Bloor
  • Cala
  • Churchill Retirement
  • CG Fry
  • Countryside
  • Crest Nicholson*
  • Croudace
  • Davidsons
  • Fairview
  • Gleeson
  • Hill Group
  • Jelson
  • Keepmoat Homes
  • Tilia
  • Lioncourt Homes
  • London Square
  • Lovell
  • Mactaggart & Mickel
  • McCarthy & Stone
  • Miller Homes
  • Morris Homes
  • Persimmon
  • Redrow
  • Rowland Homes
  • Strata
  • St Modwen
  • Taylor Wimpey
  • Vistry Partnership
  • Wainhomes
  • William Davis

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