Developers and building owners should be held financially accountable for poor building standards.
That is the view of Alan Draper, Managing Director of Henley-on-Thames-based Common Ground Estate & Property Management, following the tragic consequences of the Grenfell fire.
Last Thursday 10th December, Alan took part in an all-party parliamentary group meeting to discuss leasehold reform and commonhold.
At the meeting, Dean Buckner, former Bank of England economist and Trustee of the charity Leasehold Knowledge Partnership, outlined how post-Grenfell remediation work could be paid for through a system of levies and taxes which would be clawed back by the Government after it provided funding.
Mr Buckner presented a paper proposing:
Developers being charged a one per cent levy on new builds for 10 years, projected to raise £425m a year
A 10 per cent levy on ground rents paid to freeholders which could raise more than £1.5bn over a 50-year period
A five per cent tax on foreign buyers which could raise up to £3.75 billion over 10 years
Alan said: “Builders and developers should be responsible for bad workmanship – why should leaseholders be asked to pay the price for them cutting corners?
“As well as the lives lost, Grenfell is set to cost the public purse billions of pounds in remediation costs which is unacceptable.”
The Government has already set up a £1.6 billion fund, but current estimates put the likely final bill at closer to ten times this figure.
The meeting also heard from Michael Wade, an expert appointed by the Government, who had explained his plan to offer loans to building owners. These could then be potentially passed on to leaseholders, an idea rejected by Alan.
He added: “The idea that leaseholders should pay is a classic example of a moral hazard in that it incentivises developers and owners to take on a greater exposure to risk.”
The Government is continuing to consider options with further detail due to be revealed in due course.