SME housebuilders claim the government’s new contract forcing all developers to pay £2bn or more to fix unsafe properties is unfair.
Housing secretary Michael Gove released the details this week giving developers a six-week deadline to sign up to remediate homes that are 11 metres or above built over the last 30 years.
National Federation of Builders, NFB Richard Beresford chief executive said: “This announcement is a case of ‘Hobson’s choice’, as it tells innocent builders to sign a contract with the government, or they can stop them operating. It’s policy by optics, not serious governance.
“The fair and proportionate solution is simple, adopt a polluter pays principle which says, if you’ve done wrong, you will pay to fix your mistake.”
Mr Gove has said that he will pass legislation in the spring creating a responsible actors scheme preventing developers from operating and gaining building control approval if they fail to sign up.
“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,” said Mr Gove.
“In signing this contract, developers will be taking a big step towards restoring confidence in the sector and providing much-needed certainty to all concerned.”
Foreign developers must pay up
The contract is the legal document underpinning the cladding pledge released last year to repair fire safety defects. The government targeted 60 major housebuilders although so far only 49 have signed the pledge.
The Home Builders Federation has called on the government to honour its promise to ask foreign builders and cladding providers to pay for repairs too.
According to Housing Today the government has tightened the scope of the contract to concentrate on ‘life-critical building safety improvements’. Liabilities on joint venture projects with social housing providers are to be limited as well as with third parties. The government’s right to revisit and change the contract in the future is also to be restricted.
The NFB is lobbying for exemptions to the forthcoming building safety levy to exclude developers building less than 40 homes. It also wants the government to consult with other parties such as material manufacturers, building control professionals and architects before the levy goes live.
The trade body believes the levy is excessive given the introduction of the residential property developer tax in April charging four per cent from developers with profits of more than £25m.
Expert property finance intermediary Hank Zarihs Associates said development finance lenders are concerned that medium sized builders may struggle to stay afloat with the raft of new taxes.
