Developers will pay £5,000,000,000 tax to fix homes with dangerous cladding

A new tax on property developers will help raise £5 billion to deal with the scandal of unsafe cladding on high-rise buildings.

The money will be used to remove material from the most at-risk buildings, finally tackling a problem exposed by the Grenfell Tower disaster in 2017.

Ministers had previously announced the plan but chancellor Rishi Sunak confirmed how it will be funded in his Budget statement.

Construction companies in the sector with profits over £25 million will be taxed at a rate of 4%.

It’s unclear how much money the new levy will raise, although former housing secretary Robert Jenrick estimated it would bring in £2 billion.

Thousands of homeowners have been left with huge bills after discovering their homes are covered in flammable material.

Mary-Anne Bowring, managing director at the property management consultancy Ringley Group, said: ‘A blanket tax on developers is fairer than leaving leaseholders to shoulder the burden but it is still a blunt instrument to use to fix the cladding crisis.

‘Fundamentally, accountability should fall squarely on those who overlooked the potential hazards of unsafe cladding in the first place.’

The new levy will help to finance the Building Safety Fund but questions remain for some homeowners.

Under the terms of the scheme, the funding is only available to properties in buildings taller than 18 meters, meaning people living in smaller structures may still be left with bills.

A campaign group did not welcome the announcement and said the money raised would be insufficient to full address the problem.

Lucy Brown, of the End Our Cladding Scandal campaign, said: ‘Boris Johnson’s government seems to be operating in a time warp.

‘Today’s Budget marks the fourth time that Ministers have recycled their announcement of a £5billion commitment to help fix defective buildings affected by the cladding scandal.

‘The chancellor has also now confirmed what we always knew – that the new developer tax, which is expected to raise £2billion, will repay current funding, rather than be additional help for innocent leaseholders.

‘This £2billion developer tax spread over ten years may sound like a lot until you realise that the estimates to fix this crisis could be between £15billion and £50billion – and that ultimately it will be homeowners who will be left to pick up the can.’

Last week, it emerged unsafe cladding will not be removed from all at-risk buildings for more than three years if work progresses at its current rate.

Analysis of figures released by the Department for Levelling Up, Housing and Communities (DLUHC) revealed 30 buildings have yet to have work start at all on removing dangerous cladding and 168 are still being worked on.

This is down from 45 buildings that still had unsafe cladding and where no work had started to remove it in December 2020, with a further 201 buildings still undergoing work to remove ACM cladding.

The chancellor also announced £11.5 billion to build up to 180,000 affordable homes and an extra £1.8 billion to bring 1,500 hectares of brownfield land into use.

Every Whitehall department will receive a ‘real terms rise in overall spending’ as part of the Spending Review, the chancellor said, amounting to £150 billion over this parliament.

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