Developers to pay £2bn for repairs under new contract

Developers are required by the contract to restore buildings and pay back taxpayers; an estimated £2 billion is anticipated to be committed to paying for repairs.

Today, developers acquired enforceable contracts requiring them to pay to repair unsafe structures.

The government has given developers six weeks to sign the contracts, and it has issued a warning that any businesses that don't sign and abide by the provisions of the agreement will suffer serious repercussions.

In the spring, legislation will be introduced granting the Secretary of State the authority to forbid developers from freely operating in the housing market if they refuse to sign and abide by the remediation contract.

The Department for Levelling Up, Housing, and Communities drafted the contract, which will provide protection to thousands of leaseholders residing in hundreds of buildings throughout England. 

In the absence of cladding, these innocent homes would need to pay expensive repairs for major safety flaws.

According to the agreement, builders would contribute an estimated £2 billion or more for repairs to structures they have constructed or renovated during the previous 30 years. 

This indicates that industry is directly contributing an estimated £5 billion, along with the Building Safety Levy, to ensure the safety of their facilities.

The contract calls for developers to pay back taxpayers in cases where public funds were utilised to repair dangerous structures.

Michael Gove, the secretary of state for leveling up, housing, and communities, said:

“Today marks another significant step towards righting the wrongs of the past and protecting innocent leaseholders, who are trapped in their homes and facing unfair and crippling costs.”

“Too many developers, along with product manufacturers and freeholders, have profited from these unsafe buildings and have a moral duty to do the right thing and pay for their repair.”

Dean Finch, Group Chief Executive at Persimmon, said:

“Persimmon was proud to lead the industry two years ago with our original pledge to protect leaseholders. Since then, we have been making good progress on remediation and aim to be on site on all developments by the end of the year.”

“The publication of the developer remediation contract is the culmination of many months of hard work on all sides and we are pleased to confirm our intention to sign the final document in the near future, becoming the first developer to do so.”

Additionally, the Levelling Up Secretary will take steps to prevent managing agents and freeholders from receiving commissions when they purchase building insurance. 

This is in response to a Financial Conduct Authority research that claimed commissions account for nearly a third of premiums.

The government will also introduce further measures to increase service fee transparency and provide leaseholders who want to contest their bills more leverage.

Leaseholders will benefit from a common set of rights and obligations once developers sign the agreement. 

This will allow leaseholders to get their buildings fixed without having to pay for it, and it will also require developers to let affected building residents know how they plan to fulfill their obligations.


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