Michael Gove has sent a stark warning to property developers that have profited from installing dangerous cladding, like that was used in the Grenfell tower, telling them that “we are coming for you” as he unveils his plan to make them pay for cladding refurbishments across the UK.
Gove told MPs today that the burden of replacing dangerous cladding from millions of homes will be squarely placed on the dodgy developers and not leaseholders in the wake of the 2017 Grenfell fire, which killed 72 people.
It is estimated that property developers will be forced to pay £4bn to replace and refurbish dangerous cladding in tower blocks, with ministers set to meet with the industry in the coming weeks.
There are already two new taxes in place to collect some of the funds, however Gove said he will now ask firms to voluntarily make up the shortfall.
He said that chancellor Rishi Sunak would back him to place more taxes on developers to cover the works if necessary.
“We will give [developers] the chance to do the right thing. I hope that they will take it. If they do not, then if necessary we will impose a solution on them in law,” Gove said.
The housing secretary confirmed that no leaseholders living in buildings above 11 metres will be asked to pay for the refurbishment in a U-turn from policy announced by his predecessor Robert Jenrick last year.
He said that he recognised the “injustice of asking leaseholders, often very young people who have saved hard and have made sacrifices to get onto the first step of the housing ladder to pay money they don’t have to fix a problem they didn’t create, all the while firms who made a profit on those developments sit on their hands”.
“Those who knowingly put lives at risk should be held account for their crimes. Those seeking to profit form the crisis by making it worse should be stopped from doing so,” Gove said.
“I’m putting them on notice. To those who mis-sold dangerous products like cladding and insulation, to those who cut corners to save cash as they developed or refurbished people’s homes and those who sought to profiteer from the Grenfell tragedy – we are coming for you.”
Labour shadow housing secretary Lisa Nandy said she welcomed the government’s renewed focus on developers, but called for a clear plan to make them pay if they refuse to voluntarily cough up the funds.
She cited a letter from chief secretary to the Treasury Simon Clarke, which said that new taxes are a decision for him and not Gove.
“It appears what he’s told the public, that tax rises are the backstop, is not what he’s told the Treasury,” she said.
“This letter says you have confirmed the [Department for Levelling Up, Housing and Communities] budgets are a backstop for funding these proposals in full should sufficient funds not be raised from industry. That’s not what the secretary of state told the house a moment ago.”
Media leaks of Gove’s plan sent share prices in property developers tumbling today, with more than £1bn of value lost.
Residential developer Bellway saw shares down four per cent while Taylor Wimpey dropped three per cent on Monday afternoon.
FTSE-100 firm Berkeley also took a three per cent hit to its share price while shares in Barratt Homes sank almost five per cent.