The government will go ahead with taxing property developers to pay for the removal of unsafe cladding for leaseholders in dangerous buildings.
The Residential Property Developer Tax (RPDT) will see developers with annual profits of over £25m being taxed at an additional rate of 4%.
The tax is expected to raise £2bn over 10 years.
This will help fund a £5bn spending pledge to remove unsafe cladding, with the “highest risk buildings” being prioritised.
Chancellor Rishi Sunak said: “We’re also confirming £5bn to remove unsafe cladding from the highest risk buildings, partly funded by the Residential Property Developers Tax, which I can confirm will be levied on developers with profits over £25m at a rate of 4%.”
Mary-Anne Bowring, group managing director at leading property management consultancy, Ringley Group, said: “A blanket tax on developers is fairer than leaving leaseholders to shoulder the burden but it is still a blunt instrument to use to fix the cladding crisis.
“Fundamentally, accountability should fall squarely on those who overlooked the potential hazards of unsafe cladding in the first place.
“That those responsible should cover the costs of what is ultimately a multi-billion pound myriad of mistakes is an obvious resolution to anyone, and it’s frankly bizarre that we’re still debating this when recent fire safety legislation provided the perfect opportunity to protect vulnerable leaseholders.
“Instead, those most affected are more unclear than ever as to their obligations, or who to turn to, and are increasingly sidelined in discussions about fire and building safety.
“Replacing unfit cladding systems continues to eat away at the Building Safety Fund at an alarming rate of £30m a month, and these allocations only cover high-risk buildings.
“Empowering leaseholders and occupiers with a voice should be at the forefront of future government action.”
Most property experts seem pleased the government is doing more to remove cladding – even if some say the money isn’t enough.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said “With cladding, the £5bn fund is a step in the right direction but nowhere near the sums mentioned as being realistic to resolve the problem.
“A proper assessment of what’s involved is required, as well as enough tools to do the job in terms of engineers and surveyors and robust checking. Why should anyone be stuck in something un-mortgageable, particularly those blocks with very limited amounts of cladding?
“They have been tarred with the same brush as those blocks with extensive issues.”
Tomer Aboody, director of property lender MT Finance, said: “Cladding is a huge and deeply unfair issue, which is hitting many people hard.
“Making further funds available to deal with the cladding crisis is welcome and will help those people trapped in their homes with an additional 4% on developers with profits of more than £25 million.
“This will help those homeowners who are unable to sell or refinance due to factors completely beyond their control. However, the government must continue to monitor the situation and do more if necessary.”