‘Better than nothing, but not enough’: leaseholders react to government’s new plan to solve cladding crisis

Leaseholders caught up in the cladding crisis have reacted to the government’s new plans to encourage developers and builders to fund remediation works for buildings with safety defects, so that leaseholders don’t have to foot the bill.

Secretary of State for the department of levelling up, housing and communities, Michael Gove, laid out the government’s new approach to the cladding crisis in the House of Commons yesterday (10 January).

While the intent signalled by the new plan has been welcomed by campaigners, many leaseholders are still concerned that the announcement will not be enough, while others eagerly await the detail behind the minister’s claims.

‘From £80k to £40k’

While the government’s new plan aims to provide a solution for leaseholders whose homes are made unsafe due to unsuitable external cladding, the heightened scrutiny of building safety regulation post-Grenfell has revealed that many buildings have other, non-cladding flaws which render them unsafe.

Many of the leaseholders caught up in the building safety crisis are facing huge remediation bills and ongoing costs due to non-cladding issues like missing fire-breaks, unsuitable balconies and cavity barriers.

Although some have taken part of Gove’s comments to mean that the government does not want to see leaseholders paying for any defects, including non-cladding, the concrete aspects of the new plan relate only to cladding.

Matt, a leaseholder who spoke to NationalWorld after the announcement, said: “Frankly the announcement doesn't give me much hope.

“My bill might be cut from £80k to £40k as cladding is only part of the issue.”

Like many others who’ve been living with this issue for some time, Matt is particularly concerned that the new plan will take a long time to come into effect.

He added: “Almost worse than the financial burden is the uncertainty of the timeline.”

‘Our homes have become nightmares’

The government’s plan has been criticised for offering no support to those who’ve already paid out toward the cost of remediation - including some leaseholders who’ve taken out loans with developers - and faced significant ongoing costs.

Leaseholders stuck in housing which has been found to have fire safety defects are generally unable to sell the property, facing ongoing bills as well as large long-term remediation costs, often in the tens of thousands of pounds.

While they await remediation works, leaseholders are left paying out significant sums on an ongoing basis for increased insurance, building management fees and ‘waking watches’ - 24-hour patrols around the building to look out for fire, which have been criticised by many as ineffective, costly and unnecessary.

Leaseholder Julia told NationalWorld that she and many others “have seen service charges escalate and all our wages and savings gone”.

She said: “This is on top of a global pandemic and a hike in energy bills and the cost of living.

“Our homes have become nightmares that are bleeding us dry and edging us ever forward to mass bankruptcies.”

While Jim*, who moved to London and bought a flat which was later revealed to have a number of fire safety defects, told NationalWorld he is facing a bill for £30k, plus “skyrocketing costs for insurance and waking watch in the interim”.

He said: “I am not sure how these measures go far enough to resolve this fairly at all.”

“I've spent £10k already in interim costs. There isn't even an agreed plan to fix the building. I feel absolutely abandoned by a company I paid £270k for a flat only 3 years before this issue arose.”

‘A partial solution’

Although the outline of the scheme has been broadly welcomed by campaigners, many have doubts about the details and there remain a number of related issues which it will not address.

Jane* told NationalWorld that her husband is suffering severe mental health issues as a result of the building safety crisis, and says a fellow leaseholder has “attempted suicide 4 times over this situation”.

She says the firm which built her property went into liquidation as soon as the freehold was sold, meaning the government’s plan, to have developers pay for the defects on their own buildings, will offer her no support.

“What about buildings like mine, where those responsible have liquidated their company and the parent company won’t be able to pay either?” she asks.

Some campaigners feel that the issue has become highly politicised, and the solution proposed by the government has been motivated more by internal-party management than a desire to solve the issue.

A number of Conservative backbench MPs have been critical of the government on this issue, and there was the distinct possibility for a backbench rebellion over upcoming legislation relating to the crisis.

And while many will benefit from the plan if it goes ahead as announced, there are some concerns that without legislative backing Gove’s threats to the construction industry will go unheeded.

Joanna, a leaseholder from the Action for Fire Safety Justice grassroots campaign, said: “It feels like it’s a partial solution to appease the backbench revolt and the campaigners.

“And even so, asking developers nicely to cough up the money is not going to work, they have to legislate.

“But there are many other problems that need to be addressed, such as other defects, the cost of interim measures, insurance premium and shared ownership - where tenants are responsible for 100% of the cost of remediation even though they don’t even lease 100% of the property.”

Cladding plan could impact plans to improve social housing

Although the secretary of state has said that tax increases could be levied against firms to force them to pay, there are doubts about whether the Treasury would back such a move, and concerns that any shortfall in the £4bn will have to be made up from the departmental budget.

David Renard, housing spokesperson for the Local Government Association, said: “No leaseholder should have to pay the costs of making their homes safe and the Secretary of State’s threat to use the legal system to ensure developers meet their responsibilities to leaseholders is a positive step in the right direction.”

“However, leaseholders are not the only innocent victims of the construction industry’s failure to build safe homes.

“The construction industry must also be made to fix the fire safety defects it has built into blocks owned by councils and housing associations. Unless the Government forces the industry to act – or provides funding – we are concerned that the costs of fixing social housing blocks will fall on council housing revenue accounts and housing associations.

"This will reduce the funding available to meet the Government’s ambitions for improvements to social housing, net zero and the provision of new social housing, leaving tenants and those on the waiting list to suffer the consequences of decades of industry failure and poor regulation.”

What did the government announce?

Speaking in the House, Gove said that developers must agree to a £4 billion plan to fix dangerous cladding on buildings over 11m by early March, or risk new laws forcing them to act.

Potential action also includes restricting access to government funding and future procurements, the use of planning powers, and pursuing firms through the courts.

Leaseholders in buildings between 11m (36ft) and 18m (59ft) tall will no longer have to take out loans to cover the costs of remediation work despite no new money coming from the Treasury.

Instead, Mr Gove told developers to agree to start contributing this year to cover the “full outstanding cost”, which he estimates to be £4 billion.

The commitments also include that they must “fund and undertake” all works on buildings over 18m which they played a role in developing.

He confirmed that he had “an absolute assurance” from Chancellor Rishi Sunak that he was ready to impose taxes on the sector if they were not prepared to come forward with a solution.

“We will take action to end this scandal and protect leaseholders,” he said.

“We will make industry pay to fix all the remaining problems and help to cover range of costs facing leaseholders.

“Those who manufactured combustible cladding and insulation – many of whom have made vast profits, even at the height of the pandemic – they must pay now instead of leaseholders.”

*some names changed to protect the individual’s identity