Govt said to have dropped demands on housebuilders for £4bn cladding fund
Shares of London-listed housebuilders rallied on Monday following a report the government is dropping its demand for them to contribute towards a £4bn cladding remediation fund.
The government is embroiled in discussions with the Home Builders Federation (HBF) over a plan to remediate dangerous cladding on buildings of between 11 metres and 18 metres high. Housing secretary Michael Gove had set a deadline of Thursday 31 March for an agreement to be made.
Construction News said it was understood the two parties are "nearly there" in agreeing on terms, but that the £4bn remediation fund is not being discussed at the moment. Instead, housebuilders would pledge to remediate the medium-rise buildings they have built over the last 30 years and not apply to the Building Safety Fund (BSF) for the funding.
That would free up the remainder of the £5.1bn BSF to be used to remediate buildings higher than 18 metres. It was understood that the remediation fund will instead be discussed at a later date, during the next round of negotiations between government and industry expected to take place later in the year.
The news sent housebuilding shares surging. At 1110 BST, Persimmon was up 4.8% and Barratt Developments was 4.5% higher, while Berkeley and Taylor Wimpey were both 3.8% firmer.
Bellway, Redrow and Crest Nicholson rose 4.5%, 3.9% and 3.3%, respectively.
AJ Bell financial analyst Danni Hewson said: "Housebuilders have been in the doldrums since the start of the year despite a supercharged housing market as investors priced in the cost of making repairs. The deal on the table would require companies to deal with issues on any medium rise building they’ve built over the last thirty years, but additional funding talks would be put off until later in the year.
"The long running dispute about who should foot the bill to deal with fire safety issues has been contentious and housebuilders will need to act quickly to show they’re serious about making things right."