New tax likely to fund additional cladding removal from low-rise flats

Leaseholders in lower-rise blocks of flats will not have to take out loans to remove dangerous cladding under new government rules to be set out today. 

Michael Gove, the Secretary of State for Levelling Up, Housing and Communities, is expected to say that leaseholders in buildings between 11 to 18 metres in height will no longer have to contribute to replacing cladding.

Gove’s predecessor - Robert Jenrick - announced almost a year ago that the government would pay for the removal and replacement of cladding for all leaseholders in buildings of 18 metres and higher. But at that time he told leaseholders in lower rise buildings that they would have to take out low-interest loans and fund the removal work themselves.

Now the government appears to be rewriting its rules, but is not expected to allocate public funding for the additional cost of making low-rise buildings safe.

Instead, Gove is expected to make property developers pay the estimated £4 billion cost through increased taxes or legal action, as part of a "polluter pays" approach.

Last year Chancellor Rishi Sunak announced that a new Residential Development Tax would be levied to fund remedial work on dangerous cladding on higher rise blocks.

The levy will be four per cent and would apply to those developers making in excess of £25m profit. 

Some 31 residential developers reported profits of that scale in 2019.