What the Budget 2020 cladding announcement means: how will the new £1bn fund impact those living in potentially unsafe buildings

The Chancellor's announcement of a new £1bn fund for cladding removal, in additional to the £600m already pledged, will come as welcome news to many. Chancellor Rishi Sunak’s Budget statement confirmed £1 billion of additional funding will be allocated to the removal of unsafe cladding from residential buildings taller than 18 metres, in a move that has been hailed as a “ray of light” for thousands of homeowners still living in potentially high-risk properties.

Yet many leaseholders argue the new measures do not go far enough. The Government pledged £400 million in 2018 for the removal of Aluminium Composite Material (ACM) — the type used at Grenfell Tower in North Kensington — from social housing tower blocks, and last year an additional £200 million was allocated for the private sector. However, more than two-and-a-half years after fire tore through Grenfell Tower killing 72 people, hundreds of buildings regardless of their height remain encased in the potentially unsafe cladding. Up to 450 buildings across the UK were clad in ACM at the time of the tragedy in June 2017, and since then 127 towers have had cladding removed.

The rest remain clad in ACM. Over the past two years, it has been widely reported that ACM is not the full extent of the problem. Other materials are now thought to be potentially dangerous, and homeowners are struggling to get surveys to prove or disprove the safety of their building's cladding. Alternative materials widely used to embellish new buildings — such as timber, high-pressure laminate or plastics on walls — could also be potentially unsafe. READ MORE Do I have to pay service charge for the year before I bought my flat? What will new stamp duty rules mean for London property? Budget 2020: what does it mean for property and housing? In January, Government advice was updated to state that "the need to assess and manage the risk of external fire spread applies to buildings of any height".

Previous to this, as a reaction to the Grenfell disaster, the requirement only applied to buildings of 18 metres high and above. Mortgage lenders now require a fire-risk certificate — an ESW1 — to be in place, which involves fire engineers cutting holes in the building to check wall systems and usually takes from six to eight weeks at a cost of between £5,000 and £10,000. "Often freeholders and management company directors don't want to do it, so we've seen cases of sellers volunteering to pay the cost just to be able to move," says Mary-Anne Bowring, group managing director at residential property consultancy Ringley, which has around 1,800 leaseholders impacted by this at the moment.

Budget 2020: more funds to remove cladding Promising to go beyond dealing only with ACM, the Chancellor pledged that the new £1 billion fund will "make sure that all unsafe combustible cladding will be removed from every private and social residential building above 18 metres”. News of the fund will be welcomed by those who own homes in such buildings. But what about homeowners who feel trapped in buildings lower than the Government's “high-rise” definition? "The reality is, for those living with dangerous cladding — and they've probably known about it for two years or more — this may come as some sort of ray of light that there will be some financial support," says Bowring.

But The Hackitt Report, published a year after the Grenfell tragedy, which recommended that restrictions on building materials should apply to buildings of 10 storeys and higher, also recommended that the Government should expand this to lower buildings as well. "We didn't see anything like that happen," says Bowring, "These materials still haven't been taken off the shelf." "Until the recommendations come down, that you can't build using them at all, you can still use them — they haven't been eradicated at source. "At the moment, power is in the hands of the designer and the product specifier who say if you can use it in certain conditions, then they will be safe," she adds. What does this mean for mortgages? Last year the Royal Institution of Chartered Surveyors instructed all surveyors to have a "satisfactory and acceptable" report of a property's fire risk — and, in the absence of such a report, to return a valuation of zero, says Nick Morrey of mortgage broker John Charcol. "It's not the lender's fault, they don't want to be party to a transaction that could become a death trap," he adds.

Most management companies don't have big sinking funds to replace cladding so they approach leaseholders for the money which leads to personal loans — an "absolute catastrophe" — says Morrey. If a lender states they can't lend because of a zero valuation, Morrey suggests going to the lender to tell them that cladding is a health and safety matter which falls under "essential repairs" and which lenders are supposed to grant funds for, irrespective of credit status. But those who don't qualify for the new funds allocated by the Government, those living in buildings below 18 metres high, where the materials used are unsafe or have not yet been tested, will have to fund tests and possibly even the cladding removal themselves. "It's disappointing and very frustrating for those people," says Morrey.