Robert Booth and Peter WalkerWed, 10 February 2021, 8:24 pm
Boris Johnson stands accused of betraying homeowners after ministers unveiled a £3.5bn fund to fix dangerous cladding which risks leaving an estimated half a million people still facing financial difficulties.
The prime minister faced a backlash from his own MPs after the housing secretary, Robert Jenrick, announced that homeowners in blocks less than 18 metres tall would be left out of a new cladding crisis fund. They will be offered long-term low-interest loans instead, which some said risked pushing them into negative equity.
Last week Johnson told parliament: “No leaseholder should have to pay for the unaffordable costs of fixing safety defects that they didn’t cause and are no fault of their own.”
The new funding comes more than three years after the Grenfell Tower fire which left 72 people dead, and amid growing calls to help millions of people thought to be stuck in buildings wrapped in unsafe cladding.
The Association of Residential Managing Agents said residents in about 140,000 flats in small- and medium-sized blocks operated by its members and likely to have combustible cladding would miss out on grants, meaning up to half a million residents could be affected.
One of them, Paul Afshar, a spokesperson for the End Our Cladding Scandal campaign, said: “This feels like a betrayal.” He added: “We are talking about hundreds of thousands, if not millions of people living in lower-rise flats who have the same problem today that they work up with yesterday.”
The new policy sparked a backlash from some Conservative backbenchers, nearly 40 of whom signed a recent amendment to the government’s fire safety bill which would bar freeholders from passing fire safety costs on to leaseholders.
Stephen McPartland, a Conservative backbencher, said he had listened to the announcement “with my head in my hands” and saw it as “smoke and mirrors, to look as though we’ve tried to fix the problem, but it’s not going to do it”.
Jenrick told parliament that the cash grants would be offered to leaseholders in residential buildings in England over 18 metres tall, or above six storeys, so they faced no costs for cladding remediation works. He claimed it was the “largest ever government investment in building safety” and would mean hundreds of thousands of people would have to pay nothing.
Anyone living with dangerous cladding on buildings between four and six storeys will be able to access a new system of low-interest loans with repayments capped at £50 a month. Jenrick said the distinction was because government experts had repeatedly determined that risks were significantly lower in shorter properties, while acknowledging that many homeowners had “found themselves caught in an absolutely invidious position”.
People affected by the cladding crisis have been unable to sell their flats because mortgage companies will not lend against them. They have also faced often crippling bills to pay for remediation works that freeholders and developers have in many cases refused to fund. It has sparked a financial and mental health crisis for many.
McPartland said the funding failed to cover the costs of fire safety problems other than cladding and the loan scheme appeared unworkable. For a total bill of £50,000, “that £50 a month would take somebody 83 years to pay the bill off, and that’s just on cladding, never mind anything else. And is that on the flat, or on the individual? It just creates huge problems.”
Since Grenfell, there have been at least two serious cladding fires in buildings lower than 18m. One was at the six-storey Samuel Garside House in Barking, east London, in June 2019, when fire tore through timber cladding and balconies. The other was at the Cube, a six-storey student accommodation block in Bolton in November 2019, where high-pressure laminate cladding panels burned.
Giles Grover, a leaseholder in the City Gate development in Manchester, said the loans scheme was a “terrible idea”. He said it crystallised leaseholders’ losses. “It will instantly depress property prices and push hundreds of thousands of people into negative equity,” he said. “The arbitrary distinction [of above or below 18 metres] is unfair because the causative issues were the same – government regulation and bad building practices – but they are only helping some of the people.”
Grenfell United, the bereaved families and survivors’ group, also said the measures failed to “deal with this mess once and for all”. “Residents living in unsafe homes will go to bed tonight worrying if their building will qualify or be left out once again,” a spokesperson said. “And bereaved and survivors of Grenfell will lie awake fearful that what happened to us could still happen again.”
Jenrick said he hoped the moves would “restore confidence to this part of the housing market and ensure this situation never arises again”. “I appreciate the frustration, the worry and at times the despair that [leaseholders] feel,” he said. “I understand their anger at the errors, omissions, false promises and even the outright dishonesty that came before us, built up over many decades.”
He also announced a new levy on developers to cover the cost of grants, which will be applied when they seek planning permission to build high-rise buildings. A separate tax will be introduced from next year on money made in UK residential property development to raise £2bn over a decade and help pay for cladding remediation. Details are yet to be finalised.
Labour said the policy “betrayed their promise that leaseholders will not pay for the buildings safety crisis”.
“Why should the arbitrary height limit mean the difference between a safe home, and financial ruin?”asked the shadow housing secretary, Thangam Debbonaire, in the Commons. “Three and a half years on from Grenfell, hundreds of thousands cannot sleep at night because their homes are unsafe,” she said. “The government has today decided to plough financial misery on to them. This is an injustice.”