There are currently two main government funds open to housing associations to fund the remediation and replacement of unsafe cladding systems, summarised below. A third fund was announced by the Secretary of State for Levelling Up, Housing and Communities, Michael Gove, on 10 January 2022, which will source £4bn from developers to fund remediation in buildings of 11m to 18m in height.
Following the tragedy at Grenfell Tower, housing associations have undertaken significant remediation and mitigation works to buildings that need them. However, money spent on remediation means less to spend on building much needed new affordable homes or improving existing homes.
Our research shows that more than 1 in 10 (11%) new affordable homes to rent and buy in England can no longer be built due to the costs of making buildings safe following the Grenfell Tower fire. And that three quarters of all MPs support government paying for all building safety costs.
That’s why we’ve been asking the government to provide upfront funding to cover all leaseholders’ remediation costs – including for those buildings below 18m – and to claim the costs back from those responsible for the defects. We have been making this call through our political engagement and through various media stories.
The government announced on 16 May 2018 that it would fully fund the removal and replacement of unsafe ACM cladding on social residential buildings of 18m or over, making £400m available. This is part of an overall £600m pot of funding available to both the social and private sectors.
98% of buildings in the social housing sector that are eligible for the fund have either started or completed remediation. However, the government has kept the fund open, as it reduced the height threshold for eligible buildings to 17.7m to bring it in line with the Building Safety Fund.
In 2020, the government announced a new £1bn fund for the removal and replacement of unsafe non-ACM cladding systems on buildings that are 17.7m and over. The prospectus for the Fund was published in May 2020, confirming – following the NHF’s engagement with the government – that costs would be covered for leaseholders in both the social and private sectors.
In February 2021, the government increased the Building Safety Fund to £3.5bn. The deadline for claims from the Fund was 30 June 2021 and remedial works must have started on site by 30 September. However, DLUHC has confirmed it will take a case-by-case approach to assessing claims where these deadlines cannot be met, and that it will reopen the Fund later in 2021 for eligible buildings that had previously not submitted claims prior to the deadline.
The government has also published information on how to apply to the Building Safety Fund. After announcing an additional £3.5bn for the Fund in July, it has said it will reopen the Fund in the autumn. In January 2022, Michael Gove announced his intention to open up the next phase of the fund and accelerate the pace at which funding is distributed, so work can begin more quickly. He also signalled his intention to align the Building Safety Fund with the risk-based approach to building safety works that the government advocates, and make information about the progress of fund applications available to residents.
The NHF has been raising housing associations’ challenges in meeting the deadline for starting works on site, despite working as quickly as possible to inspect buildings and secure contractors for the works. DLUHC will still expect organisations claiming from the Fund to provide realistic but ambitious project delivery timetables and will consider enforcement action where they believe progress is too slow. The NHF will keep calling for a flexible approach to these deadlines, and for the government to coordinate the resources needed to remediate buildings and apply them on a risk basis.
In January 2022, Michael Gove announced his intention to establish a new £4bn fund for the remediation of unsafe cladding on buildings of 11m to 18m. The funding will be sourced from developers, and is intended to protect leaseholders from building safety costs.
This funding is intended to cover the costs of remediating unsafe cladding only. However the government has made clear that it does not expect leaseholders to foot the bill for any building safety costs and it will legislate to prevent freeholders from being able to charge for works.
We understand that housing associations will not be asked to contribute to the £4bn funding pot, but that they are encouraged to recover remediation costs from responsible parties where possible, and absorb any costs they themselves are responsible for.
We are working with the government following the announcement to secure further clarification on this funding, including understanding how non-external wall related costs will be covered and how housing associations can access funding.
We understand that funding will not be available for housing association buildings without leaseholders, but the Secretary of State has acknowledged the sector’s unique social purpose and the impact that building safety costs have on its wider work – and has promised to work closely with us to mitigate this impact.