New Laws to Make Industry Pay for Building Safety

NEW MEASURES to force industry to pay to remove cladding from high rise buildings have been added to the Building Safety Bill, Secretary of State for Levelling Up, Michael Gove, has revealed.

If developers won’t pay, the government will block planning permission and building control sign-off on developments, effectively preventing them from building and selling new homes.

The proposals will see the industry pay to fix historical problems, rather than leaseholders, as was originally proposed by government.

The Department for Levelling Up, Housing and Communities says it is in ongoing discussions with industry leaders – who, they say, agree that leaseholders should not pay cladding removal costs – with progress being made.

Building Safety Levy

The government will also be able to apply its new building safety levy to more developments, with scope for higher rates for those who do not participate in finding a workable solution.

The government says it hopes to not have to use these powers; but says if developers and manufacturers do not act responsibly, they must face commercial and financial consequences.

Courts will also be given new powers to allow developers to be sued where they have used shell companies to manage specific developments to avoid taking responsibility.

If passed by Parliament, the amendments to the Building Safety Bill will be brought into law.

Secretary of State for Levelling Up Michael Gove

Secretary of State for Levelling Up Michael Gove said: “It is time to bring this scandal to an end, protect leaseholders and see the industry work together to deliver a solution.

“These measures will stop building owners passing all costs on to leaseholders and make sure any repairs are proportionate and necessary for their safety.

“All industry must play a part, instead of continuing to profit whilst hardworking families struggle.

“We cannot allow those who do not take building safety seriously to build homes in the future, and for those not willing to play their part they must face consequences.

“We will take action to keep homes safe and to protect existing leaseholders from paying the price for bad development.”

Construction Product Manufacturers

Cost Contribution Orders will be able to be placed on manufacturers who have been successfully prosecuted under construction products regulations. These orders will require them to pay their fair share on buildings requiring remediation. The government says it is wrong that, until now, a manufacturer could be found guilty of misconduct but could not be charged to fix the problems they caused in selling defective products.

Building Safety Bill Amendments

Amendments to the Building Safety Bill will also allow building owners and landlords to take legal action against manufacturers who used defective products on a home that has since been found unfit for habitation. The power will stretch back 30 years and allow recovery where costs have already been paid out.

New clauses will also enshrine in law the commitment the Levelling Up Secretary made in the House of Commons last month that no leaseholder living in their own home, or sub-letting in a building over 11m, ever pays a penny for the removal of dangerous cladding.

If passed by Parliament, these clauses will hugely reduce the invoices that have been sent to leaseholders for taking down cladding, in some cases for over £100,000.

Other Building Safety Issues

The provisions announced today will also go further than the package outlined last month by protecting leaseholders on non-cladding costs. Under the plans, developers that still own a building over 11m that they built or refurbished – or landlords linked to an original developer – will be required to pay in full to fix historic building safety issues in their property.

Building owners who are not linked to the developer but can afford to pay in full will also be required to put up the money to do so.

Leasholder Bill Cap

In the small number of cases where building owners do not have the resources to pay, leaseholders will be protected by a cap. The cap will be set at similar levels to ‘Florrie’s Law’ which applies to some repairs to social housing: £10,000 for homes outside London and £15,000 for homes in the capital. This will limit how much leaseholders in this scenario can be asked to pay for non-cladding costs, including waking watch charges.

Any costs paid out by leaseholders over the past 5 years will count towards the cap, meaning some leaseholders will pay nothing more. Currently, building owners can simply pass all costs on to leaseholders, with no incentive to hold back on unnecessary remediation work, bringing misery to leaseholders.

The proposed government amendments are due to be debated in the House of Lords during the Committee Stage of the Building Safety Bill which begins on Monday 21 February 2022.

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