Shares in housebuilders hit after Gove orders them cough up £4bn to fix the cladding crisis
Housebuilders saw £1.6billion wiped off their value after the Government demanded they foot a £4billion bill to remove unsafe cladding from tower blocks.
In an open letter to property developers yesterday, Housing Secretary Michael Gove warned he was prepared to take ‘all steps necessary’ to force the industry to contribute towards the cost of safety works, including restricting access to government funding.
He added that the Government may ultimately resort to laws or the courts to force developers to cough up the cash.
Repair bill: Housing firms have until early March to agree on a plan to cover the costs associated with removing dangerous cladding from buildings between 11 and 18 metres high
Housing firms will have until early March to agree on a fully-funded plan to cover the costs associated with removing dangerous cladding from buildings between 35 and 60 feet high.
Gove also said in a speech to MPs that the Government will crack down on rogue firms responsible for building unsafe homes.
‘I am putting them on notice,’ he said. ‘If you mis-sold dangerous products like cladding or insulation, if you cut corners to save cash, we are coming for you.’
The strong words sent shares in FTSE 100 property firms tumbling, with Persimmon dropping 5.1 per cent while Barratt Developments fell 4.9 per cent, Berkeley slumped 3.6 per cent and Taylor Wimpey sank 3.5 per cent.
The pain was also felt among the mid-cap developers, with Redrow sliding 4.5 per cent while Bellway shed 4 per cent, Crest Nicholson lost 1.8 per cent and Vistry Group dropped 2.9 per cent.
It is the third time property companies have had to dip into their pockets to fund cladding removal, having already set aside almost £1billion to fix existing buildings while another £2billion is expected to be raised from a ‘cladding tax’ that comes into force in April.
The removal of unsafe cladding has been a key aim for the Government following the Grenfell Tower fire in 2017, in which 72 people died.