Dangerous cladding fund top up announced

10th February 2021

The Government has today (10 Feb) announced a further £3.5bn in funding to remediate dangerous cladding across the country, which is a top up of the already £1.6bn pledged via the Building Safety Fund and the ACM Cladding Remediation Fund.

As many in the construction industry already knew, the initial funding was going to fall significantly short of the amount required by the scale of the issues faced by leaseholders nationwide. For some, doubt will still remain whether this latest commitment of funds will be enough, with estimates that the true scale of the cost may be closer to £15bn.

There has also been a significant announcement for leaseholders in properties below 18 metres which have dangerous cladding. Those owners were often finding themselves in difficult positions, being advised that they should remove and replace cladding, but being faced with denials of liability from developers, new build warranty providers and others, based on the distinction that the building was below 18 metres.

Repayments will be capped at £50 per month, presumably across many years. The detail of this scheme will remain to be seen, however, many will question why they should pay at all, even if on favourable terms. It is unclear whether there will be other terms attached to such loans, for instance requiring claims to be put to contractors or developers where such claims are within their limitation periods.

The Government has made its own position on recovery from the industry clear. It will now introduce a levy on developers of £2bn spread over the next decade to defray the costs of remediation. It appears that will be in addition to requiring applicants to the remediation funds to pursue all reasonable claims against third parties.

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