Government consults on cladding remediation tax on developers

Replacement of unsafe cladding (image: Dreamstime)

The government has launched a consultation on plans for a new residential property developer tax, aimed at helping to raise £2bn towards a £5bn cladding remediation package.

The UK-wide tax, originally announced in February this year, will apply to residential developers’ profits over £25m under the proposals.

Calling for views on the plans, the government said the tax:

  • would apply to “a measure” of developers’ profit from UK residential development;
  • would only apply to in-scope profits over £25m; and
  • would apply to conversion of existing buildings as well as new construction.

In an announcement about the launch of the consultation, the Treasury said ministers would set out the rate of the tax at a “future fiscal event”. The time-limited tax is due to apply from 2022. It was announced in February after the government pledged to fund the cost of replacing unsafe cladding for all leaseholders in residential buildings 18 metres and over in England.

Housing secretary Rt Hon Robert Jenrick said: “We’re making the biggest improvements to building safety standards in a generation, investing over £5bn helping to protect leaseholders from the cost of replacing unsafe cladding on their homes and ensuring industry is held to account for the wrongs of the past.

“This tax will strike the right balance between developers making a contribution and ensuring fairness for the taxpayer.”

Financial secretary to the Treasury Jesse Norman said: “Ending the use of unsafe cladding is a priority for the government, as it builds back better from the pandemic. Given the significant costs associated with the removal of unsafe cladding, it is right to seek a fair contribution from the largest developers in the residential property development sector to help fund it.

“The government wants to ensure this tax is proportionate and works as intended, which is why it is launching this consultation today.”

The consultation can be found here.

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  1. It’s all well and good that someone other than leaseholders should foot the bill for any remedial work, putting the cost solely onto developers misses two key parts of the supply chain that should be contributors to any remedial costs. Whilst everyone is focused on the cladding and therefore the material supplier what about poor installation, particularly missing firebreaks in the cladding and around windows and any poorly installed fire detection and suppression systems. This is defective construction and should be bourn by the contractors and, if they are no longer in business, perhaps the NHBC or other warrantors. If contractors haven’t built in accordance with the Building Regs current at the time of construction surely they should be held to account.

  2. Why, why, why don’t the government make the cladding manufacturers pay up for this debacle, also you will always get installers who don’t come up to scratch, (cheap foreign labour) and lack of knowledge. Stop making the “customer pay” philosophy from Architects run as a norm. A radical rethink needs to happen, will anybody be brought to account over the doctored fire tests????????

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