Appearing before MPs on the Levelling Up, Housing and Communities Committee this week, Gove said that people who owned multiple properties would not be protected under law from future costs of remediating unsafe cladding.
Last week, Gove warned that developers and manufacturers who refused to help fix cladding issues could be blocked from the housing market, adding that leaseholders should not have to pay for the work.
But Timothy Douglas, from Propertymark, a professional body for the property sector, said assumptions had been made about buy-to-let landlords’ wealth, and called on the government to ensure that they did not pay for a crisis he claimed “was not of their own making”.
Read more: Industry to pay for unsafe cladding issues
He said: “The broad assumption that has been made about the financial status of buy-to-let landlords shows there is more for the UK government to do to fully understand the private rented sector.
“Assuming that landlords with more than one property are ‘of significant wealth’ and therefore have the means to contribute without support could have a negative impact on the amount of time that it takes to make buildings safe and fail to restore full confidence in this area of the market.
“So while it’s a step forward to bring what the secretary of state termed ‘landlords by default’ within the scope of the fund, the UK government must get a better grasp of the sector as a whole and ensure that all landlords, who are also leaseholders, do not have to pay for a crisis that is not of their own making, regardless of their perceived financial status.”
On 10 January, Gove announced a plan to protect leaseholders by making wealthy developers and companies pay to remove combustible cladding following the 2017 Grenfell Tower fire.
Developers were told they had until March to commit around £4bn to the ACM (aluminium composite material) remediation programme and the Building Safety Fund aimed at removing unsafe cladding on 11- to 18-metre-high buildings.
Read more: ‘Catastrophic’ cladding fire test results revealed during inquiry.
However, at the Commons committee, Gove admitted that £5.1bn of taxpayers’ money had so far already been committed to the Building Safety Fund.
According to Gove, there are 481 buildings requiring remediation – 160 are high-rise residential in the hands of registered social landlords; 226 are private sector high-rise residential; 56 are student accommodation; 31 are hotel high rises; and eight are public buildings.
At the evidence session, Gove was asked how the government would decide whether a freeholder could afford to pay for remedial work, noting that there were “fairly low-capitalised companies who essentially live off the ground rents” they obtained.
Gove replied that as they had decided to take on the freehold, “they must bear the costs and not seek to pass them on to the leaseholder”.
He added: “My view is that, if you are the sort of individual or institution that owns a freehold for a block of flats, you are unlikely to be indigent or in need of government support.”
He admitted that while developers, product manufacturers and the Home Builders Federation were not enthusiastic about having to pay for the removal of dangerous cladding, there was a widespread recognition that leaseholders should not pay, adding that housebuilders and developers had “engaged positively with the negotiating process”.
He said: “There is an acceptance that, for the work required to be done on those buildings that are their buildings…they need to step up. They have acknowledged that the work required in order to ensure that the buildings they are directly owners of should take place. They should remediate their own buildings.”
Gove also voiced concerns within the industry that some unscrupulous landlords could use the fund “to improve buildings beyond that which is required purely by safety”.
The chair expressed fears that a number of foreign-based developers might avoid having to pay their fair share, with Gove revealing that “some of the most egregious transgressors are companies that are based outside the United Kingdom”.
He named two – Ireland-based Kingspan and Iconic – as two “we have been seeking…to demonstrate to them that they cannot evade these responsibilities”.
