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Govt's threat to take developers to court ‘needs urgent clarity’

Govt's threat to take developers to court ‘needs urgent clarity’
  Housing minister Michael Gove

Housing minister Michael Gove’s warning to developers that he will take “all steps necessary” - including “the imposition of a solution in law if needs be” - to fix the cladding crisis needs "urgent clarification”, a trade body has said.

Yesterday (January 10), Gove wrote to the industry requesting developers to stump up £4bn by early March for remediation work on cladding on 11-18 metre buildings.

These funds are in addition to a 4 per cent property developer tax which came into force this year and is set to raise a further £2bn over 10 years.

In his letter, Gove told developers he was “prepared to take all steps necessary to make this happen”.

Some of these included “commercial consequences”, such as restricting developers’ access to government funding and future procurements, modifying developers’ use of planning powers, and pursuing companies through the courts.

The housing minister warned “if the industry fails to take responsibility” in the way he has set out, the “imposition of a solution in law” will be considered.

But the Intermediary Mortgage Lenders Association has criticised Gove’s announcement for “provid[ing] punchy headlines” and “few specific details”.

Kate Davies, IMLA’s executive director, said: “Yesterday's announcement on the cladding crisis will be welcomed by beleaguered leaseholders, but there are still points that need urgent clarification for both renters and developers. 

“Gove’s mention of ‘commercial consequences’ and the statement that leaseholders will be able to sue builders for up to 30 years, provide punchy headlines but few specific details.

“The question of enforcement is one that will loom over the sector, as taking builders to court will require time, money and courage from already-exhausted leaseholders and, if undertaken by the government, gives little relief to leaseholders in the interim.” 

She continued: “Even where the government provides a timeframe, this vagueness persists. Developers have been given two months to create a plan for resolving the growing cladding costs crisis but, without a sense of the time required for the government Apex taskforce to identify and contact recalcitrant developers, leaseholders have been given little more of a promise than ‘trust us and wait’.”

Currently, the House of Lords is considering an amendment to the Building Safety Bill, which would see money demanded for defective building work only, offering a more targeted solution to asking the entire developer industry to make contributions.

But Gove made no nod to this legislation in his latest announcement. The minister has previously cited the 'polluter pays' approach to MPs, and his intention to justify it as a solution.

In separate supporting documents published yesterday, Gove's department also said leaseholders will now be able to demand compensation from their building’s developer for safety defects up to 30 years old, an extension on the current 15 years.

To reign in developers, the government set up a new regulator in July to oversee the UK’s cladding safety regime.