Unsafe cladding and the new developer levy

10 Feb 2021 4 min read

The Housing Secretary, Robert Jenrick, has today unveiled a 5-point plan to remove unsafe cladding. The plan includes a new tax and levy for developers of certain high-rise buildings to cover the cost of grants. What will this entail?

The 5-point plan to remove unsafe cladding

The 5-point plan can be summarised as follows:

An extra £3.5bn of funding for leaseholders to remove unsafe cladding from high-rise residential buildings 18 metres (6 storeys) and over in England, which the Government says will ensure that funding is targeted at the highest risk buildings – this is in addition to the £1.6bn of funding announced in 2020;
Owners of flats in lower-rise buildings between 11 and 18 metres (4 to 6 storeys) will have access to long-term, low interest, government-backed loans to replace unsafe cladding, with leaseholders paying no more than £50 per month for cladding removal;
A new ‘Gateway 2’ developer levy to cover the cost of grants which will apply when developers seek permission to develop future high-rise buildings in England;
A separate new tax for on UK residential property development from 2022 to raise £2bn over the next 10 years to help pay for cladding remediation costs; and
Bringing forward legislation this year (in the new Building Safety Bill) to tighten the regulation of building safety and review the construction products regime to ensure that a tragedy like Grenfell never happens again.

The new ‘Gateway 2’ developer levy

The new ‘Gateway 2’ developer levy ties into the Gateway Regime set out in the draft Building Safety Bill published in July 2020 which is currently being scrutinised by the select committee.

It is expected that the Building Safety Bill will receive royal assent this Summer.

Building Safety Bill and Gateway Regime

The new Gateway Regime to be introduced by secondary legislation will apply to all new multiple-occupancy residential buildings that are over 18 metres in height.

Once in force, such buildings will be unable to be legally occupied until they have been registered with the new Building Safety Regulator (see below) and a certificate (a “Building Assurance Certificate”) has been obtained confirming that the building is fit for occupation.

To obtain a Building Assurance Certificate, the building project must pass through a new Gateway regime. The regime is made up of 3 gateways (stop/go decision points) which are intended to provide rigorous inspection of regulatory requirements to help ensure building safety risks are considered at each stage of a building’s planning, design and construction.

The regime will be overseen by a new statutory consultee, a Building Safety Regulator, who will drive improvements in building safety and performance standards and provide specialist fire safety input on planning applications containing a higher-risk building. The Regulator will be given powers to:

prosecute offences under the Building Safety Bill and the Building Act 1984; and
issue compliance and stop notices – a failure to comply with these will amount to a criminal offence.

The 3 Gateways

The three Gateway points are as follows:

GATEWAY	STAGE	SUMMARY
Gateway One	Planning	Those applying for planning permission will be required to submit information (in the form of a Fire Statement) to the Local Planning Authority with the planning application information demonstrating fire safety requirements which impact on planning considerations have been considered at an early stage and incorporated into the proposals. The Building Safety Regulator will provide specialist fire safety input on the proposals and those applying for planning will be under a duty to consult the Regulator. This requirement will be taken forward through secondary legislation and statutory guidance under the Town and Country Planning Act 1990.
Gateway Two	Prior to construction work beginning.	This provides a "hard stop" whereby construction cannot begin until the Building Safety Regulator is satisfied that the design meets the functional requirements of the Building Regulations and does not contain any unrealistic safety management expectations.
Gateway Three	Completion / Final Certificate stage	All documents and information on the final, as-built building (“the Golden Thread”) must be handed over to the Accountable Person and the Building Safety Regulator will assess whether the work has been carried out in accordance with the Building Regulations. Once the Building Safety Regulator is satisfied, it will issue a Building Assurance Certificate which shall be periodically reviewed. The building can only be occupied once the certificate is issued (although it can be partially occupied if the Regulator has issued a Partial Building Registration Certificate). As part of the process the principal designer and principal contractor will be required to sign declaration that building complies with Building Regulations.

It should be noted that the Building Safety Bill make provision for the regime to apply retrospectively to existing buildings which fall within its scope. Therefore, to be lawfully occupied it can be assumed that eventually all high-rise multiple-occupancy residential buildings will require a Building Assurance Certificate.

Whilst critics have raised concerns today that the additional £3.5bn applies only to certain high-rise buildings over 18 metres in height and does not go far enough, it should also be noted there is scope within the Building Safety Bill for the definition of ‘higher risk building’ to be amended and/or extended to increase its application to buildings of less than 18 metres in height and/or to other building types.

'It "cannot be right the costs fall solely on tax payers", he said, adding that the government would develop a levy targeted at developers seeking to build certain high-rise buildings in England.'

https://www.bbc.co.uk/news/uk-56013464