Cladding tax on new homes delayed for a year
April 14, 2025
On 25 March, it was announced that ministers had decided to delay a proposed cladding tax on new homes to pay for the remediation of dangerous cladding.
Property developers had warned the government that it could hinder their housebuilding plans, which compelled them to delay the Building Safety Levy until Autumn 2026.
Replacing dangerous cladding
The tax on new homes – first announced by the Conservative government in 2021 – is expected to raise up to £3.4bn, which will be spent on building safety, including replacing dangerous cladding. However, property developers said the tax could increase building costs and result in the government missing its target to build 1.5 million homes by 2030.
Housing Minister Matthew Pennycook confirmed that the government was still committed to the tax and insisted the delay would not slow down the pace of improving building safety. “We’ve got to increase the pace of works being done. Leaseholders are still trapped in these buildings.”
Neil Jefferson, chief executive of the Home Builders Federation, welcomed the delay as “recognition from government that these additional costs will inevitably constrain housing supply”. He also suggested the “grossly unfair” tax on housing developers should be scrapped.
He followed that with: “As proposed it will add thousands of pounds to the cost of new homes, threatening the viability of sites across swathes of the country at a time when industry is striving to reverse the decline in homebuilding numbers that we have seen in recent years.”
Who should foot the bill for cladding remediation?
Ministers are said to have set aside £5.1bn to resolve the cladding issue. Which means they expect housing developers, building owners and social housing providers to pay the rest.
Across the UK, thousands of homes have already been made safe. In December 2024, work had yet to begin on a quarter of the 1,323 tall buildings which required cladding remediation. It is estimated that up to 12,000 buildings and three million people could be affected.
Housebuilders say they are already paying some £6.5bn towards improving building safety – via corporation tax – and argue that the makers of the unsafe cladding should bear more of the costs.
The Home Builders Federation estimates that a cladding tax could add up to £1,580 to the cost of building a home, which could lead to the loss of circa 70,000 affordable homes over 10 years.
Premier Estates’ cladding remediation success
Premier Estates has its own cladding remediation success story at FRESH Apartments, just outside of Manchester city centre.
FRESH was constructed circa 2007, and comprises 141 residential apartments and a ground floor commercial unit. Premier Estates have managed the development since 2016?
As a result of the Grenfell Tower tragedy, all UK apartments were assessed to discover which were clad in potentially dangerous materials.
FRESH was identified in 2017 as an apartment block with old-style cladding. This highlighted an urgent need for the existing cladding to be replaced with safer materials.
A challenging site to remediate
The site itself is challenging to remediate due it being landlocked to all but one elevation. This includes a railway line on one side.
On identifying FRESH as needing new cladding, there was no clear path forward as to how that could be achieved. Eventually, the work was funded by building warranty provider and government (PSCRF).
Works commenced in March 2021, and was originally planned to be a 13-months programme with circa £7m project value. Once the work commenced, other issues arose that also needed to be addressed. These have pushed the project’s completion date back and added further costs. The access complications and the need to replace all of the windows were just two of the hurdles to overcome.
As of March 2025, the project is very close to completion, with a final project value of circa £17million.
The best part is yet to come… Premier Estates has managed to undertake the whole project with no extra cost to the residents!
We are extremely proud of the outcome and would like to thank the residents for their patience.
Premier Estates provide award-winning property management services across the UK. Please call 0345 491 8899 to speak to one of our team about managing your property portfolio.
Sources:
- https://www.bbc.co.uk/news/articles/c0kg0d46527o
- https://www.bbc.co.uk/news/articles/cly80q3w5g7o
- https://bmmagazine.co.uk/news/extra-cladding-tax-will-jeopardise-1-5-million-homes-target-warns-berkeley-group/
