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There has been much coverage in recent weeks around the government’s £3.5bn worth of funding to fix dangerous combustible cladding on highrises in England.
What has not been reported on as widely, is exactly how the government is planning to recoup this funding, which is where a new tax on larger residential property developers from 2022 comes in. It is expected that this planned ‘Cladding Remediation Tax’ will raise around £2bn over 10 years, and will ‘ensure the largest property developers make a fair contribution to the remediation programme in relation to the money they make from the residential property market’. In addition to the Cladding Remediation Tax, the government is expected to introduce a levy when developers seek planning permission for highrises.
Whilst these measures are set to apply in England, the issue of dangerous, combustible cladding on highrises is also of concern here in Northern Ireland. Although it remains to be seen, similar measures such as taxes and levies on property developers could well be introduced by the Northern Ireland Executive in due course, and ultimately, the associated costs to developers could end up being passed down to purchasers. Developers will likely have to recover these costs via the purchase price of the properties and the ongoing service charge payable by homeowners. The latter will mean increased long term costs for homeowners that is often overlooked at the outset of the property purchase process.
It is also worth noting that many prospective purchasers of properties in existing highrise or apartment complex buildings are pulling out of purchases if they learn that the cladding in the building is not up to current standards.