Mortgages  

Govt reserves for cladding removal ‘nowhere near’ enough

Govt reserves for cladding removal ‘nowhere near’ enough
  Chancellor Rishi Sunak laying out his Budget in Parliament

Experts have accused UK chancellor Rishi Sunak of “tiptoeing away” from the cladding scandal, and to have invested “nowhere near enough” in funds for unsafe cladding remediation.

Whilst Sunak largely recycled figures from old housing announcements in last week's (October 27) Budget, including the government’s £5bn cladding-focused package from February, he also shed light on a 4 per cent property developer tax to tackle the cladding crisis.

The ‘Residential Property Developer Tax’ is set to raise £2bn, but remains part of the £5bn fund the government has already announced. It will apply to firms earning more than £25m a year from next year.

Lee Nuttall, head of tax at law firm Gowling WLG, said 4 per cent was “on the high side” of the range of expected outcomes, but “not a surprise” given a pre-announced threshold for who will actually be liable to pay the tax.

Nuttall added the £25m 'allowance' before the new tax bites “will be seen by many as a generous move”.

But for those 2m or more leaseholders stuck in unmortgageable homes due to cladding woes, listening to Sunak’s Budget yesterday would have brought them little hope.

Jeremy Leaf, a former RICS residential chairman, said the unchanged £5bn fund was “nowhere near the sums mentioned [by the industry] as being realistic to resolve the problem” leading up to the Budget.

Since February, campaigners such as Polluter Pays have estimated a bill closer to anywhere upwards of £10bn, arguing even with a developer tax, leaseholders will be left to pay the remaining £8bn.

Leaf continued: “A proper assessment of what’s involved is required, as well as enough tools to do the job in terms of engineers and surveyors and robust checking. 

“Why should anyone be stuck in something un-mortgageable, particularly those blocks with very limited amounts of cladding? They have been tarred with the same brush as those blocks with extensive issues.”

Govt ‘point the finger’

Some have accused the 4 per cent property developer tax of being nothing more than a government smoke screen to the real problems at hand.

Jeremy Raj, national head of residential property at law firm Irwin Mitchell, said: “As feared, the government has now confirmed its intention to point the finger at a select group of developers, tax them - in a way that doesn’t address the issue or change behaviours - and then tiptoe away from the cladding scandal.”

Raj called on “all interested parties” to work together to ensure that “the heat isn’t turned down” in respect of making funds available for remedial work, as well as improving the regulatory, planning and building regulations framework.

In his autumn Budget, Sunak also promised an additional £65m investment to improve the planning regime, “through a new digital system” which he said would ensure “more certainty and better outcomes for the environment, growth and quality of design”.