The Ministry of Housing has today sent developers the necessary paperwork requiring them to fix tall buildings and reimburse taxpayers
Companies who fail to sign the 93-page legal document within the six- week deadline or fail to comply with the terms of the contract “will face significant consequences”, said levelling up secretary Michael Gove.
Legislation will be brought forward in the spring giving the secretary of state powers to prevent developers from operating freely in the housing market if they fail to sign and comply with the remediation contract.
The contract, which has been drawn up by the Department for Levelling Up, Housing & Communities, is designed to protect leaseholders from having to pay for repairs and safety defects. It started out as a cladding issue in the wake of the Grenfell Tower fire but now goes beyond that.
Under the contract, developers will commit an estimated £2bn or more for repairs to buildings of 11 metres or higher that they developed or refurbished over the past 30 years. This means that together with the Building Safety Levy, industry is directly paying an estimated £5bn to make their buildings safe, the ministry said.
The contract also requires developers to reimburse taxpayers where public money has been used to fix unsafe buildings.
Secretary of state for levelling up, housing and communities Michael Gove said: “Today 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.”
Dean Finch, chief executive of house-builder Persimmon, said: “Persimmon was proud to lead the industry two years ago with our original pledge to protect leaseholders. Since then, we have been making good progress on remediation and aim to be on site on all developments by the end of the year.
“The publication of the developer remediation contract is the culmination of many months of hard work on all sides and we are pleased to confirm our intention to sign the final document in the near future, becoming the first developer to do so.
“The terms of the contract are entirely consistent with our existing commitment to protect leaseholders in multi-storey buildings we constructed from the costs of remediating cladding and life-critical fire-related safety issues. We are pleased to reaffirm this commitment today and that we were able to work constructively with the government to secure the agreement.”
Under legislation to be brought forward this spring, a Responsible Actors Scheme (RAS) will be created, allowing the secretary of state to block developers who have not signed the contract or failed to comply with its terms from carrying out development and from receiving building control approval. This will prevent them from operating as normal in the housing market for as long as they do not resolve the problems of the past.
The secretary of state 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.
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