Housing Secretary Michael Gove has given a six-week ultimatum to developers to sign a government contract to remedy residential towers with ‘unsafe’ cladding, or be banned from working in the sector. 

Developers have received legally binding contracts from the Department of Levelling Up, Housing and Communities that will commit them to pay to repair “unsafe buildings,” which they are required to sign in six weeks.

The Secretary of State has warned that companies who fail to sign and comply with the terms of the contract, which have been developed to protect leaseholders, will face “significant consequences.”

Legislation will be brought forward in the spring giving the Secretary of State “powers to prevent developers from operating freely in the housing market if they fail to sign and comply with the remediation contract.” Developers will be required to “make safe” buildings they developed or refurbished over the past 30 years, to the tune of £2bn, meaning an estimated total of £5bn including the Building Safety Levy.

The contract also requires developers to reimburse taxpayers where public money has been used to fix unsafe buildings.

This follows Secretary of State for Levelling Up, Housing and Communities, Michael Gove, demanding developers are held to account, which led to public pledges from 49 of the country’s leading developers that they would take responsibility to fix their own buildings, which will now be turned into legally binding commitments.

Secretary of State for Levelling Up, Housing and Communities, Michael Gove, said: “Too many developers, along with product manufacturers and freeholders, have profited from these unsafe buildings and have a moral duty to do the right thing and pay for their repair.”

He added: “There will be nowhere to hide for those who fail to step up to their responsibilities – I will not hesitate to act and they will face significant consequences.”

Dean Finch, group chief executive at Persimmon, the first developer to sign up to the contract, said: “The terms of the contract are entirely consistent with our existing commitment to protect leaseholders in multi-storey buildings we constructed from the costs of remediating cladding and life-critical fire-related safety issues.” 

He added: “We are pleased to reaffirm this commitment, and that we were able to work constructively with the Government to secure the agreement.” Barratt were expected to be the second housebuilder to sign up to the agreement.

DLUHC said that once the contract is signed by developers, “leaseholders will benefit from a common framework of rights and responsibilities that will get their buildings fixed without them having to pay, and will require developers to inform residents in affected buildings how they will be meeting these commitments.”

Gove said that while a “significant process” had been made to make safe “the most dangerous buildings” over 18 metres, “far too many” unsafe buildings still need remedial work.

The move follows Gove’s admission to the Sunday Times that the Building Regulations were “faulty and ambiguous” in the run-up to the Grenfell Tower fire. He also said there had been an “active willingness” on the part of developers to endanger lives for profit, but also blamed collective government failures “over many years”. However while the Government in 2021 acknowledged “past failures” in overseeing construction safety, it said that if regulations had been followed the fire could not have happened.

The Secretary of State told the Sunday Times that the flaws in regulation “allowed unscrupulous people to exploit a broken system.” Architects and housing officials remain under investigation following the 2017 fire, and the findings of the inquiry will be published later this year.

Gove drew a distinction between “sins of omission and sins of commission,” in a recent BBC interview, suggesting that, while the Government was guilty of the former, some developers were guilty of the latter. “There is an active willingness to put people in danger in order to make a profit, which to my mind is a significantly greater sin,” he said.