This week LKP submitted to Housing Minister Lord Greenhalgh a financial proposal (attached) outlining how to fund the remediation works for cladding and related fire safety defects.
It offers a financial solution that doesn’t involve either a huge taxpayer bailout or for leaseholders being penalised simply for being the unwitting purchasers of flawed products.
The LKP proposal funds the remediation works without requiring the government to provide upfront funding beyond the existing Building Safety Fund. Instead, it is financed entirely by the private sector.
The proposal has been authored by Dean Buckner, former Bank of England economist and a trustee of the Leasehold Knowledge Partnership. He has been assisted by legal and City professionals.
The proposal suggests the issuance of a 50-year bond at a rate of approximately 0.6% (very attractive to the fixed income market). The bond would be repaid by a system of levies of the housing sector – potentially a cladding manufacturer levy, a ground rent levy, a developer levy and a non-domiciled residential property tax.
The proposal also recommends that the cladding remediation and associated works be VAT zero-rated.
Dr Buckner outlined a draft of the proposal to the All Party Parliamentary Group on leasehold and commonhold on December 10. It can be viewed here:
The APPG was also addressed by Michael Wade, the former insurance sector businessman, who is advising government on financial solutions to the cladding scandal.
At present, the re-sale market in flats in the UK is stalled, and 10,000s of leaseholders face financial ruin owing to the cladding remediation costs and associated expenses such as waking watch costs and vastly increased building insurance premiums.
The LKP cladding levy proposal can be read and downloaded here: