Building firms today received legally binding contracts worth £2bn that will commit them to pay to repair unsafe buildings, from the Department for Levelling Up, Housing and Communities.  

The department, led by secretary of state Michael Gove, has set a six-week deadline for developers to sign the legal agreements and is warning that companies who fail to do so “will face significant consequences”.  

Gove is committed to bringing forward legislation in the spring to prevent developers from operating freely in the housing market if they fail to sign and comply with the remediation contract, aimed at tower blocks fitted with insulation cladding deemed to be a fire risk.  

Under the contract, developers will commit “an estimated £2bn or more” for repairs to buildings they developed or refurbished over the past 30 years.   

The department says: “This means that together with the Building Safety Levy, the industry is directly paying an estimated £5bn to make their buildings safe.”  

The contract also requires developers to reimburse taxpayers where public money has been used to fix unsafe buildings.  

The move follows Gove demanding that firms should be held to account for these building failures in January 2022, which later led to pledges from 49 developers that they would take responsibility to fix their own buildings.  

These pledges will now be “turned into legally binding commitments”, the department says.  

The move comes after the Grenfell fire tragedy, which killed 72 people in 2017.  

The aftermath of the blaze left some 1.5 million leaseholders stuck in flats with similar cladding that they were unable to secure mortgages for because they were deemed unsafe. Leaseholders faced bills amounting to tens of thousands of pounds to remove the cladding.  

Gove says: “Today marks another significant step towards righting the wrongs of the past and protecting innocent leaseholders, who are trapped in their homes and facing unfair and crippling costs.  

“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.  

“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.  

“There will be nowhere to hide for those who fail to step up to their responsibilities – I will not hesitate to act and they will face significant consequences.”  

FTSE 100 home builder Persimmon is one of the first developers to back the scheme.   

Persimmon group chief executive Dean Finch says: “Persimmon was proud to lead the industry two years ago with our original pledge to protect leaseholders. Since then, we have been making good progress on remediation and aim to be on-site on all developments by the end of the year.  

“The publication of the developer remediation contract is the culmination of many months of hard work on all sides and we are pleased to confirm our intention to sign the final document in the near future, becoming the first developer to do so.  

“The terms of the contract are entirely consistent with our existing commitment to protect leaseholders in multi-storey buildings we constructed from the costs of remediating cladding and life-critical fire-related safety issues.”  

However, some small and medium-sized developers are worried that signing the contract will leave them with unmanageable liabilities.  

Last April, Galliard Homes co-founder and executive chairman Stephen Conway accused Gove of acting “like Al Capone” and the mafia.