Rishi Sunak will slap a new tax on the big housebuilders to help fix the cladding scandal in next week’s Budget.
The Chancellor will target the developers to recoup around £2billion of the cost of removing the dangerous materials from high-rise buildings.
He will announce that the levy will be implemented from next year on the profits of the most profitable firms.
It is a victory of the Daily Mail, who has been a leader in calling for ministers to fix unsafe homes.
This newspaper’s End The Cladding Scandal campaign has demanded that the firms responsible for the crisis should be made to pay their fair share.
Chancellor Rishi Sunak is set to target big housing developers to recoup around £2billion of the cost of removing dangerous cladding materials from high-rise buildings
The Residential Property Developer Tax will be imposed on UK housebuilders that make profits of more than £25million a year.
It is understood that Mr Sunak will levy between 3 and 5% on profits above this threshold.
It is expected to raise around £200million a year – which would amount to £2billion over the ten years it is due to be in place – clawing back some of the cost to taxpayers of fixing the problem.
Sunak calls on the firms to pay for compensation for unsafe cladding in hundreds of thousands of homes and flats. He believes that the restoration of confidence in the housing market will be a benefit to them.
Ministers have pledged £5.1billion to help end the safety crisis in the wake of the Grenfell Tower fire in west London, which killed 72 people in June 2017.
Hundreds of thousands of flat owners have faced the threat of bills of up to £150,000 each because their homes are wrapped in unsafe cladding.
The Government had earlier this year announced that it would pay for the cost of replacing unsafe cladding in England for leaseholders living in residential blocks with at least 18 m high. This is six storeys.
Ministers have pledged £5.1billion to help end the safety crisis in the wake of the Grenfell Tower fire in west London, (above) which killed 72 people in June 2017
Those in low and medium-rise blocks will pay a maximum of £50 a month for ‘long-term, low-interest’ loans to help them replace their cladding.
The country’s biggest housebuilders make significantly more than £25million a year, with Persimmon, Berkeley, Taylor Wimpey and Barratt Homes reporting pre-tax profits of £784million, £504million, £492million and £264million respectively last year.
In February, Barratt chief David Thomas said the company would ‘support a fair, prospective levy as part of any way of easing the burden on homeowners without threatening the future supply of much-needed new homes’.
John Tutte, chairman of Redrow, said a levy raising around £200million a year would not be ‘a massive amount’ for the industry to pay.
Emma Byrne from End Our Cladding Scandal suggested last night that developers face a more punitive income tax
She said: ‘£2billion over ten years is a drop in the ocean for them. They can easily afford to pay many multiples of this risible amount – it is a simple point of fairness that the Government forces them to fix the mess they have created.
‘Many of those caught up in this scandal bought homes that should never have passed building regulations in the first place – yet it is they who stand to be bankrupted to make their homes safe.
‘Since the Grenfell Tower tragedy, seven developers have recorded combined profits of more than £15billion and ten executives have personally received a mindboggling £708million.’
Mr Sunak will announce in his Budget Wednesday the tax on developers. The Treasury declined to comment.