Recommendation 4

HM Government Acknowledged

We believe that establishing a “Comprehensive Building Safety Fund” as the Committee recommends would drive unnecessary remediation works to the detriment of leaseholders. The Government is advocating a proportionate approach to building safety. This will deliver a safe level of risk management, whilst preventing unnecessary, expensive works that would be disruptive for people living in the buildings in question. The recommendation would also have likely negative impacts on the wider housing market by removing the incentive to undertake work only in proportion to risk and thus exacerbating incorrect perceptions of risk. The Government is working closely with industry to restore market and leaseholder confidence by rebuilding and supporting the housing market, so it responds proportionately to risk, especially for lower and medium rise buildings. The Government’s approach to cladding remediation prioritises the safety of all residents and leaseholders according to the risk of loss of life and structural damage that a fire could pose, based on expert advice which consistently shows that the height of a building is a key factor. Our approach to supporting unsafe cladding remediation therefore aligns with the new building safety regime that ensures a proportionate approach to managing building-safety risk is balanced against costs to industry and the taxpayer. We have provided £5.1 billion for the remediation of unsafe cladding in building over 18 metres, which will ensure that high-rise buildings can be made safe. It is right that we have focused grant funding on the tallest buildings – this is in line with longstanding independent expert advice on which buildings are at the highest risk – because the risk to multiple households is greater when fire spreads in buildings of this height. Cladding remediation also typically represents the highest costs. It is generally easier to tackle fires in lower-rise buildings and easier for residents to evacuate if fire does spread. We do understand that a minority of buildings may need remediation to remove and replace unsafe cladding where other mitigations and fire protection measures are not sufficient. We agree with the Committee that it is fundamentally unfair that innocent leaseholders, who have worked hard and made sacrifices to get a foot on the housing ladder, should be landed with bills they cannot afford, to fix problems they did not cause. We have been in intensive talks since January with the home-building sector to come forward with proposals on how it will take responsibility for fixing unsafe buildings built over the past 30 years. Over 40 of the largest residential developers have now agreed to a pledge to: - take responsibility for all necessary work to address life-critical, fire-safety defects on buildings 11 metres and over that they had a role in developing or refurbishing, and - withdraw any such buildings from the Building Safety Fund and Aluminium Composite Material (ACM) Fund and reimburse funding approved from those funds for such buildings. In addition to the commitment made by firms to fix buildings they have played a role in developing in the last 30 years we will establish a new 11-18m cladding remediation scheme through which to fund work on buildings where a responsible developer cannot be identified. The new scheme will be funded by expanding the scope of the Building Safety Levy to raise an additional estimated £3 billion, providing the necessary funds to address cladding issues on these remaining buildings. We believe this is the fairest approach to ensure a broad range of firms involved in residential property development pay towards addressing the problem whilst continuing to protect leaseholders from these costs. The Government recognises that it is not right that leaseholders should be the first port of call for the funding of non-cladding remediation and we have made it clear in the Building Safety Act 2022 that, where the freeholder of a building is, or is associated with, the developer, or where the freeholder has sufficient resources, they should pay for all remediation work needed to address non-cladding. Where the freeholder is not linked to a developer they will only be able to pass on costs to leaseholders where they have a net worth of less than £2 million per in-scope building and have first exhausted all other available options. We do not agree with the recommendation that overseas building owners should not be eligible for remediation funding. This would delay remediation by preventing buildings with overseas owners and complex ownership structures from undergoing remediation, which would delay the building being made safe.