Housing Secretary Robert Jenrick said the government will “fully fund the cost of replacing unsafe cladding for all leaseholders in residential buildings 18 metres (6 storeys) and over in England.”
Residents in lower-rise buildings between 11 and 18 metres will “gain new protection from the costs of cladding removal with a generous new scheme.”
This will pay for cladding removal through a long-term, low interest, government-backed “financing arrangement.”
Under the scheme, no leaseholder will ever pay more than £50 a month towards the removal of unsafe cladding.
A new tax on developers is also being drawn-up to help fund the cladding removal programme.
It will raise at least £2bn and “will ensure that the largest property developers make a fair contribution to the remediation programme, reflecting the benefit they will derive from restoring confidence to the UK housing market.”
The government said it will consult on the policy design in due course before it is introduced next year.
A new developer levy will also “apply when developers seek permission to develop certain high-rise buildings in England.”
Jenrick said: “Our unprecedented intervention means the hundreds of thousands of leaseholders who live in higher-rise buildings will now pay nothing towards the cost of removing unsafe cladding.
“Remedying the failures of building safety cannot just be a responsibility for taxpayers.
“That is why we will also be introducing a levy and tax on developers to contribute to righting the wrongs of the past.”
Developers have reacted angrily to the plan.
Andrew Southern, Chairman of property developer Southern Grove said: “Taxing developers, most of whom weren’t responsible for the cladding crisis, is just laughable.
“Why should a company that has never installed dangerous cladding, and perhaps never built high rise blocks in the past, be tarred with the same brush and penalised when they’re no more responsible for this scandal than those in other sectors building cars, running our hospitals and educating our children?
“This sort of regressive tax will only stagnate housebuilding, which is the exact opposite of what the UK needs.
“By applying it only to the largest developers building the tallest buildings, it will also disincentivise creation of housing in the high density areas that are badly in need of new stock.”