Cladding tax to raise £2bn over decade: Rishi Sunak targets major developers’ profits with planned new levy to help fix fire-trap flats
- Chancellor Rishi Sunak set to launch new £2billion housebuilder cladding tax
- Big developers’ pockets will be hit to help fund taxpayers who face cladding bills
- Ministers have so far pledged £5.1billion to help end the safety crisis in the wake of the Grenfell Tower fire in west London, which killed 72 people in June 2017
Rishi Sunak will slap a new tax on the big housebuilders to help fix the cladding scandal in next week’s Budget.
The Chancellor will target the developers to recoup around £2billion of the cost of removing the dangerous materials from high-rise buildings.
He will announce that the levy on the profits of the most lucrative firms will come into force from next year.
It is a victory for the Daily Mail, which has led the way in calling on ministers to repair unsafe homes.
This newspaper’s End The Cladding Scandal campaign has demanded that the firms responsible for the crisis should be made to pay their fair share.
Chancellor Rishi Sunak is set to target big housing developers to recoup around £2billion of the cost of removing dangerous cladding materials from high-rise buildings
The Residential Property Developer Tax will be imposed on UK housebuilders that make profits of more than £25million a year.
It is understood the levy will be set by Mr Sunak at between 3 and 5 per cent on profits above this threshold.
It is expected to raise around £200million a year – which would amount to £2billion over the ten years it is due to be in place – clawing back some of the cost to taxpayers of fixing the problem.
Mr Sunak wants the firms to cough up as redress for building hundreds of thousands of flats and homes with unsafe cladding. He believes they will benefit from confidence being restored in the housing market.
Ministers have pledged £5.1billion to help end the safety crisis in the wake of the Grenfell Tower fire in west London, which killed 72 people in June 2017.
Hundreds of thousands of flat owners have faced the threat of bills of up to £150,000 each because their homes are wrapped in unsafe cladding.
The Government announced earlier this year that it will fund the cost of replacing unsafe cladding for leaseholders in England in residential blocks that are at least 18 metres high, which is six storeys.
Ministers have pledged £5.1billion to help end the safety crisis in the wake of the Grenfell Tower fire in west London, (above) which killed 72 people in June 2017
Those in low and medium-rise blocks will pay a maximum of £50 a month for ‘long-term, low-interest’ loans to help them replace their cladding.
The country’s biggest housebuilders make significantly more than £25million a year, with Persimmon, Berkeley, Taylor Wimpey and Barratt Homes reporting pre-tax profits of £784million, £504million, £492million and £264million respectively last year.
In February, Barratt chief David Thomas said the company would ‘support a fair, prospective levy as part of any way of easing the burden on homeowners without threatening the future supply of much-needed new homes’.
John Tutte, former chairman of Redrow, said a levy raising around £200million a year would not be ‘a massive amount’ for the industry to pay.
Emma Byrne, from the End Our Cladding Scandal campaign, last night suggested the developers should face a more punitive tax.
She said: ‘£2billion over ten years is a drop in the ocean for them. They can easily afford to pay many multiples of this risible amount – it is a simple point of fairness that the Government forces them to fix the mess they have created.
‘Many of those caught up in this scandal bought homes that should never have passed building regulations in the first place – yet it is they who stand to be bankrupted to make their homes safe.
‘Since the Grenfell Tower tragedy, seven developers have recorded combined profits of more than £15billion and ten executives have personally received a mindboggling £708million.’
The tax on developers will be announced by Mr Sunak in his Budget on Wednesday. The Treasury declined to comment.