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Nicola Laver

Editor, Solicitors Journal

£3.5 billion cladding cash pot gives limited comfort

£3.5 billion cladding cash pot gives limited comfort


The news of the £3.5 billion cladding bailout has been widely criticised as insufficient for leaseholders

The news of the £3.5 billion cladding bailout by government has been widely criticised as insufficient for leaseholders.

Criticisms were also aimed at the new tax announced on the residential development sector, which is set to be introduced next year to help pay for combustible-material remediation on tower blocks. 

Jonathan Frankel, head of property litigation at Cavendish Legal Group, said the cash pot announced this week by housing secretary Robert Jenrick was “completely insufficient to deal with even a fraction of the blocks up and down the country where these repairs must take place”.

He added: “The fact that it only applies to buildings over 18 metres will cause even more uncertainty for those residents and leaseholders living in lower rise blocks where they feel insecure and unsafe.”

Even a lower risk, he said, is a risk which will impact the saleability of their property.

A leasehold protection scheme capping repair payments at £50 a month for leaseholders was also announced, but Frankel said this “will bring little comfort to many who feel they shouldn’t have to pay for somebody else’s mistakes”.

Tom Pemberton, a partner in Goodman Derrick’s construction team, welcomed the funding announcement but said it leaves many unanswered questions – particularly the fact that it will be restricted to buildings more than 18 metres high. 

Pemberton said it appears “that it will not cover the cost of other essential work to make buildings of any height safe”.

“For example”, he added, “a fire risk is often presented by faulty smoke ventilation systems and combustible insulation inside the external wall (not the external cladding). These elements need to be signed off by accredited fire safety professionals before properties become mortgageable and marketable.”

He said the reality was that “those hardest hit so far will continue to suffer months of uncertainty and anxiety until an acceptable solution is found which addresses all the wider safety issues”.  

In the meantime, he said developers will undoubtedly question why they are being singled out to pay the costs of the new scheme through a levy on their future high-rise schemes, “in addition to a tax on them which the government hopes to yield £2 billion over a decade”.

Tristan Wark is a senior associate in Goodman Derrick’s commercial real estate team. He also lives in a London flat where the cladding has been assessed as not meeting the required standards (the building owner plans to commence remediation works this year).

Wark said that while the government’s announcement “isn’t an instant fix, nor will it allay all concerns… hopefully it will provide some comfort to those leaseholders concerned about facing the costs of the necessary remediation works”.