By Samuel Indyk
Investing.com – Shares of UK homebuilders were trading lower on Monday morning after the UK government announced a plan to force developers to fix the cladding crisis.
UK Secretary of State for Levelling Up Michael Gove has given the industry a deadline of early March for a fully funded plan of action, warning that the government will take all necessary steps to make it happen, including imposing solution in law.
Gove said the plan of action must include remediating unsafe cladding on buildings between 11 metres and 18 metres tall, currently estimated to cost around £4 billion.
The action comes following the deadly Grenfell fire in 2017 that killed 72 people. The fire shone a light on the use of flammable cladding in many blocks of flats across the country.
“It is neither fair nor decent that innocent leaseholders, many of whom have worked hard and made sacrifices to get a foot on the housing ladder, should be landed with bills they cannot afford to fix problems they did not cause,” Gove said in a statement.
“Government has accepted its share of responsibility and made significant financial provision through its ACM remediation programme and the Building Safety Fund. Some developers have already done the right thing and funded remedial works and I commend them for those actions.
“But too many others have failed to live up to their responsibilities.”
The government has yet to announce a decision on which companies are in scope for funding contributions following discussions but expect it to cover all firms with annual profits from housebuilding at or above £10 million.
Homebuilders listed on the London Stock Exchange include Persimmon (LON:), Redrow (LON:), Barratt Developments (LON:), Countryside Properties PLC (LON:), Berkeley Group (LON:), Taylor Wimpey (LON:), Bellway (LON:), Vistry Group (LON:), and Crest Nicholson (LON:).
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