London mayor calls for £3bn developer tax to pay for fire safety work

The mayor of London has called for a £3bn levy on housebuilders to pay for the cost of fire safety work on high rises in the wake of the Grenfell tragedy.

Sadiq Khan said a one-off 10% tax on the £30bn of profit made by listed builders over the last decade would raise £3bn, preventing homeowners from facing “extortionate” bills to rectify unsafe homes.

Khan (pictured, right) said builders could have 10 years to pay the tariff, which he said would equate to a “a very small contribution for the enormous impact remediation works would have on people’s safety and quality of life”. However, the London mayor himself has no power to bring in such a tariff, which would have to be brought in by central government.

Tens of thousands of leaseholders in high-rise blocks have been hit by a growing crisis over the safety of their homes, following checks undertaken in the wake of new guidance issued after the Grenfell fire. This has left thousands effectively unable to sell their homes without coughing up many thousands of pounds for their share of remediation work, often to replace cladding systems now deemed unsafe.

Khan said the crisis had left thousands of Londoners in a state of “constant anxiety over the safety of their homes and the cost of putting right past failures”.

The tariff would reduce the average margin for listed developers from 20% to 18.7%, he said, and would not apply to housing associations or SME developers. The move follows the mayor writing to 40 landlords in September demanding they take action to remediate unsafe blocks.

Government figures from December showed that 74 tower blocks clad in Grenfell-style ACM cladding have not yet started work to replace the material, three and a half years on from the tragedy.

A committee of MPs in November demanded the government cover the cost of repairs to tower blocks up front in order to allow residents to carry on with their lives. The government, however, has insisted that the costs should fall on the owners, developers, contractors and designers of blocks identified as at risk.

Khan said: “I have always been clear that the responsibility for funding building safety work must lie with government. However, we cannot deny the role that industry has played in making decisions that have compromised the safety of buildings.

“I am determined to find a solution that can make homes safe without passing on the burden of the cost to leaseholders – it is wrong for them to bear the costs of historic errors they have played no part in causing. This levy would have a minimal impact on developer profits but would prove lifechanging for London leaseholders.”