The Mayor of London, Sadiq Khan, has proposed that the Government introduce a ground-breaking levy on major private property developers that could raise £3 billion to address the rampant inequality in building safety standards and fund vital cladding replacement work on properties across London.
Three and a half years after the Grenfell Tower fire, thousands of Londoners continue to live in a state of constant anxiety over the safety of their homes and the cost of putting right past failures. Whilst some organisations have done the right thing, the failure of Government, developers and building owners to fund this essential work for all means too many residents face extortionate bills to rectify unsafe homes, with Ministers failing to bring forward a solution to the crisis. Therefore, the Mayor is proposing a one-off levy on developer profits generated over the last decade to fund the essential fire safety work that is needed.
City Hall analysis of accounts data for publicly listed housebuilders has revealed pre-tax profits of £30bn over the last decade. A 10 per cent levy would raise at least £3 billion to carry out remediation work and help ensure no leaseholder is left out of pocket.
To ensure the levy is paid in full without impacting future development, Sadiq is proposing that repayment could occur over a number of years. Government could then act quickly to fund building safety work, with the reassurance that funds from the levy would cover the costs.
A levy at 10 per cent repaid over 10 years would reduce the typical profit margin developers make on new homes from 20 to 18.7 per cent – a very small contribution for the enormous impact remediation works would have on people’s safety and quality of life.
This is the latest intervention from the Mayor, who has repeatedly lobbied the Government to ensure residents in unsafe buildings don’t have to pay for the cost of making their homes safe, and has pressed building owners to speed up the replacement of unsafe cladding.
In September the Mayor wrote to 40 private landlords demanding that they put the safety of their residents first and begin work to remove the most dangerous aluminium composite material (ACM) cladding from their buildings. London has more than twice as many private blocks with ACM cladding as the rest of the country combined.
The Mayor of London, Sadiq Khan said: “I have always been clear that the responsibility for funding building safety work must lie with Government. However, we cannot deny the role that industry has played in making decisions that have compromised the safety of buildings.
“I am determined to find a solution that can make homes safe without passing on the burden of the cost to leaseholders – it is wrong for them to bear the costs of historic errors they have played no part in causing. This levy would have a minimal impact on developer profits but would prove lifechanging for London leaseholders.”