A new levy on large residential property developers’ profits intends to raise around £2 billion over the next 10 years, starting from next spring.
The ‘cladding tax’ will be a 4% tax on developers with company profits of £25 million or more from residential development, although student and build-to-rent developments are exempt.
It expects to raise around £200m a year, which will go towards the removal of flammable cladding from hundreds of thousands of high-rise flats around the UK.
The Treasury said the cladding tax will “ensure the largest developers make a fair contribution to help pay for building safety remediation”.
The new tax kicks in from 1 April 2022, nearly five years after a fire killed 72 people at Grenfell Tower in West London.
Removing the unsafe cladding from the highest-risk buildings is expected to cost at least £5bn, but campaigners claim the real cost is much higher.
Jonathan Hale, head of government affairs at the Royal Institute of Chartered Surveyors, said:
“The £5bn for cladding replacement will give more leaseholders greater peace of mind that their homes will be made safe, but it’s still well short of the £15bn needed that is estimated to fix every building.”