Government pledge £3.5bn to fix cladding crisis but victims face bills

Anger at cladding ‘betrayal’: Government pledges £3.5bn to help fix crisis – but innocent victims STILL face massive bills to make their fire-risk homes safe

    Politicians and campaigners angrily rejected long-awaited Government plans to end the cladding scandal yesterday as a betrayal of innocent leaseholders.

    Housing Secretary Robert Jenrick pledged a further £3.5billion to help end the safety crisis following the 72 deaths in the Grenfell disaster.

    More than a million leaseholders face bills of up to £115,000 to fix unsafe homes. Mr Jenrick told the Commons that those in blocks over 18 metres (60ft) high would no longer have to pay to replace flammable cladding. But MPs and leaseholders reacted with fury at the news that loans costing up to £600 a year will be forced on hundreds of thousands of homeowners in low and medium rise blocks – potentially blighting resale values.

    And all victims still face bills of tens of thousands of pounds to fix other defects, such as missing fire breaks and combustible insulation.

    Housing Secretary Robert Jenrick pledged a further £3.5billion to help end the safety crisis following the 72 deaths in the Grenfell disaster

    With the Government pledging £1.6billion for repairs last year, Mr Jenrick’s announcement brings to £5.1billion the taxpayer’s outlay. But MPs estimate it will cost £15billion to fix the crisis.

    And while Mr Jenrick indicated there would also be a levy on developers – who have made profits of £15billion since the Grenfell inferno four years ago – that is set to raise only £2billion over ten years. A proposed levy on construction projects will raise an unknown amount.

    It sparked calls for building firms and ministers to do more to cover the costs of decades of safety failures.

    Conservative MP Stephen McPartland, a prominent critic of the Government’s handling of the crisis, dismissed the statement as ‘smoke and mirrors’.

    Mr Jenrick indicated there would also be a levy on developers – who have made profits of £15billion since the Grenfell inferno (pictured) four years ago

    He tweeted: ‘I am listening to Robert Jenrick’s announcement with my head in my hands. Wondering how he can have got this so wrong. It is a betrayal of millions of leaseholders. It is not good enough. It is shocking incompetence. It is clear the PM has to step in now.’

    Fellow Tory Sir Peter Bottomley called Mr Jenrick’s move ‘a major step forward’ but admitted there was more to be done.

    Labour housing spokesman Thangam Debbonaire said the proposals ‘still leave too many people struggling’.

    About four million people are affected by the scandal, with more than a million flat owners paying £2.2billion a year for safety measures and extra insurance while waiting for repairs to be carried out. It threatens to wreck the housing market as a whole, with flat sales falling by 48 per cent amid safety fears and red tape.

    Just 216 of a possible 11,760 dangerous buildings have been fixed since the Grenfell fire in west London in June 2017.

    The Daily Mail is calling on ministers to end the scandal within 18 months and spare leaseholders the crippling financial burden. It also wants the firms responsible for the crisis to pay their fair share.

    Mr Jenrick said his announcement will provide ‘certainty that leaseholders in high-rise residential buildings will face no costs for cladding remediation works’.

    Contractors undertaking works at a residential property in Paddington, London, as part of a project to remove and replace non-compliant cladding

    He said the measures would boost the housing market and free up homeowners to buy and sell their properties.

    More than two million people are thought to be living in unsafe low and medium rise buildings. They will be forced to take on loans as part of a ‘long-term, low-interest scheme’ with payments capped at £50 a month.

    But critics believe the size of the debt, which could be up to £24,000, will be deducted from the value of homes when they are sold, pushing leaseholders into negative equity. The Housing Secretary also failed to give details on how other defects would be paid for. And MPs pointed out that there were no measures to alleviate the costs of 24-hour fire patrols imposed on high-risk buildings at an average of £499 a month per flat – or insurance increases averaging £1,307 a year.

    A survey by Inside Housing reveals that around one in six of affected leaseholders is considering bankruptcy and 15 per cent face bills of more than £100,000 – double the estimated average. More than two-thirds need to repair missing fire breaks and 59 per cent have flammable balconies – the cost of repairing these faults is not covered by the Government fund.

    The magazine found that 65 per cent have had to dip into savings to pay for repairs, while 21 per cent have borrowed from friends or family. Campaign group Grenfell United said Mr Jenrick’s plans were ‘too little, too late’. A spokesman added: ‘We needed something to deal with this mess once and for all – we didn’t get that today.

    ‘Residents living in unsafe homes will go to bed tonight worrying if their building will qualify or be left out once again. The industry needs to be held fully responsible for what they have done – a small levy doesn’t cut it.’ Sebastian O’Kelly, of the Leasehold Knowledge Partnership charity, described the plans as ‘piecemeal’.

    Paul Afshar, of campaign group End Our Cladding Scandal, said: ‘The Government promised us no leaseholder would have to pay to make their homes safe. Today we feel betrayed.’ 

    How Big 5 developers have made £10bn since Grenfell fire 

    By Arthur Martin and Ruth Sunderland for The Daily Mail

    As the financial hardship of many leaseholders continues, building firms are cashing in on a property market boom.

    The five biggest developers have made around £10billion in profits since the Grenfell Tower inferno, allowing them to shower more than £4.5billion on shareholders in dividends.

    The Government’s Help to Buy scheme, which offers loans to first-time buyers, has played a key part – £13billion has been doled out but developers are the real winners, as a Mail audit of the five biggest shows.

    Barratt Developments

    Value of company: £7bn

    Pre-tax profits since Grenfell: £2.2bn

    Dividends since Grenfell: £1.26bn

    Help to Buy revenue: £1.84bn/year (approx)

    Cladding removal fund: £82m

    David Thomas, Chief executive of Barratt Developments

    The first housebuilder to back calls for a developer levy, it has already spent £82million for remedial action on cladding and other defects.

    Without a comprehensive list of the housing blocks at risk, it is impossible to say how far the money will go.

    Profits for the second half of last year alone hit £430million. Around 44 per cent of its sales for that period were boosted by the Help to Buy scheme.

    Chief executive David Thomas has been paid £14million in the past five years, peaking in 2019 at £3.7million.

    Mr Thomas lives in a sprawling estate in Purley, south London. Bought for just under £2.6million in 2008, it is now worth around £4.5million.

    Persimmon

    Dean Finch, chief executive of Persimmon

    Value of company: £8.82bn

    Profits since Grenfell: £2.1bn

    Dividends since Grenfell: £1.48bn

    Help to Buy: £1.9bn/year (approx)

    Cladding removal fund: £75m

    Persimmon pledged £75million yesterday to pay for work on 26 buildings that may be affected by the cladding issue. Of these, nine are high rises over 18 metres.

    The company, which has been synonymous with excess in the building industry, has embarked on a drive to improve its reputation. Its profits are boosted thanks to Help to Buy. The scheme accounted for about 60 per cent of its sales in 2018 and helped it to almost triple its profits per house to £66,265.

    In the year after Grenfell, Persimmon became the first British housebuilder to make annual profits of more than £1billion and paid then chief executive Jeff Fairburn £85million over two years.

    Last year it appointed Dean Finch, who previously turned around National Express, as its new chief executive. It has started the year with a record order book. Analysts predict that it will have made £847million in profits in 2020 despite the coronavirus.

    Pete Redfern, chief executive of Taylor Wimpey

    Taylor Wimpey

    Value of company: £5.94bn

    Pre-tax profits since Grenfell: £1.65bn

    Dividends since Grenfell: £1.1bn

    Help to Buy revenue: £1.7bn/year (approx)

    Cladding removal fund: £40m

    The fortunes of building boss Pete Redfern stand in stark contrast to the desperate straits of many flat-owners.

    Taylor Wimpey’s long-standing chief executive has been paid £40million in ten years – the same sum the firm has earmarked to replace cladding.

    Mr Redfern lives in an Oxford mansion bought for £4.75million in 2016 and has a portfolio of Taylor Wimpey properties in the UK and Spain, mostly purchased through a staff discount scheme. In 2019, he backed down from plans to take advantage of a £436,000 discount on a £2.48million riverside apartment in central London.

    Jason Honeyman, Chief Executive of Bellway

    Bellway

    Value of company: £3.7bn

    Pre-tax profits since Grenfell: £1.5bn

    Dividends since Grenfell: £465m

    Help to Buy revenue: £772m/year (approx)

    Cladding removal fund: £86.8m

    Bellway has seen revenues soar by 12 per cent to £1.7billion in the past six months and completed a record 5,656 homes, up 6.3 per cent on a year ago. It has set aside £86.8million to make fire safety improvements to its homes.

    Chief executive Jason Honeyman earns £1.09million and lives in a mansion in Chislehurst, south-east London, bought for £2.9million in 2016.

    Bellway cancelled a dividend to shareholders during the first lockdown, only to reinstate it in October.

    Rob Perrins, Chief executive of Berkeley Group

    Berkeley Group

    Value of company: £5.29bn

    Pre-tax profits since Grenfell: £2.3bn

    Dividends since Grenfell: £349.5m

    Help to Buy revenue: £196m/year (approx)

    Cladding removal fund: Unknown

    The luxury developer has made huge profits in recent years and has been criticised over executive pay, facing a shareholder rebellion two years ago.

    Chief executive Rob Perrins lives in a sprawling £4million six-bedroom period property in Woking, Surrey.

    Berkeley has been praised by some campaigners post-Grenfell for doing work on a number of its developments without waiting for government intervention. However it has repeatedly declined to reveal what it is offering and how many flats have defects.

    Controversially, Mr Perrins last year said that the Government should relax a blanket ban on combustible cladding and adopt a risk-based approach.

    We are no better off, says pregnant mum 

    A pregnant mother whose flat does not qualify for funding to remove cladding said the Government’s plan is ‘shambolic’.

    Laura Bell, 32, said her situation was ‘exactly the same as before’ because her building is only four storeys high.

    The commodities trader, pictured, who is expecting her second child next month, is desperate to move to a bigger property with her husband James and one-year-old daughter. She said: ‘This announcement is awful for us. It’s all a bit of a shambles. The arbitrary height set at 18 metres is a blow.

    Laura Bell, 32, (pictured) said her situation was ‘exactly the same as before’ because her building is only four storeys high

    ‘I’m due any week now so we really need to move out as soon as possible.’

    In October she was told her two-bedroom flat in Penge, south-east London, was covered in dangerous cladding. She fears she will face bills of up to £30,000 to replace it. While the Government has promised costs will be capped at £50 a month for the removal of unsafe cladding on properties under 18 metres, Mrs Bell believes she shouldn’t have to pay.

    She added that she worried about the impact of additional loans on the value of the property, which she bought in 2016.

    Mrs Bell said: ‘We did not design or build these buildings with cheap, shoddy materials. We are the only party without blame here… But we are the ones whose livelihoods are being sacrificed.’ 

    Who gets help… and who’s been left in the cold

    What’s been announced?

    Housing Secretary Robert Jenrick yesterday announced an extra £3.5billion from Government to replace dangerous cladding from high-rise buildings. It takes the total pot to £5billion. Those in low and medium-rise blocks will pay a maximum of £50 a month for ‘long-term, low-interest’ loan to help them replace their cladding.

    Who does it help?

    Mr Jenrick said leaseholders in high-rise buildings – 18 metres (six storeys) and above – won’t pay to replace dangerous cladding. It may relieve 700,000 people of average bills of £25,000 each.

    Who misses out?

    Leaseholders in low and medium-rise blocks say their repayments, which could cost £600 a year, are unaffordable with other bills such as 24-hour fire patrols (around £499 a month per flat) and insurance hikes (around £1,307 a year). Estimates say more than 2million live in unsafe buildings below 18 metres. Critics say the size of the debt, which could be up to £24,000, will be deducted from the value of homes when leaseholders try to sell, pushing many into negative equity.

    Is this just about cladding?

    Hundreds of apartment blocks in England and Wales have other safety defects such as combustible insulation and timber balconies. Mr Jenrick ducked questions on payment for these repairs, which often cost more than replacing cladding. Leaseholders in unsafe buildings of all heights are still liable for tens of thousands of pounds to make their homes safe.

    Why does height matter?

    Mr Jenrick said the Government was focusing on high-risk buildings and that cladding on low and medium-rise buildings would often not need replacing. But since Grenfell, two major fires have occurred in buildings below 18 metres. Campaigners say it is unfair for leaseholders to pay up to £600 a year to fix defects because they live in low or medium rise blocks.

    Will it speed up repairs?

    Extra Government funding should allow more work to get under way. But this will be limited to high-rise buildings and the pot only covers cladding issues. Just 216 out of a possible 11,760 dangerous buildings have been fixed since Grenfell.

    Does it help with the housing market?

    About 1.27million properties are unsellable due to rules introduced after Grenfell. An EWS1 certificate is required to prove a building is safe before lenders will offer a mortgage. Mr Jenrick said the measures allow homeowners to buy and sell once again – but it is unclear how. An industry consultation launched last month could free 600,000 homes from the process.

    Will the industry pay its dues?

    A planned developer tax could raise £2billion over a decade. There will also be a levy on some high-rise projects, but it is unknown how much this may raise. Critics say construction giants can and should pay more to cover the costs of the scandal, while building owners, manufacturers and insurers should not get off scot-free.

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