The UK government’s Remediation Acceleration Plan on unsafe cladding in English housing developments “should be helpful” for the housebuilding sectors, according to Citi analysts.
Announced on Monday, the Plan aims to address the slow pace of fixing residential buildings with unsafe cladding in England following the 207 Grenfell disaster that led to more than 70 deaths.
Key barriers to fixing existing cladding issues identified in a policy paper include landlord inaction, limited regulatory capacity, disputes between developers and freeholders, and insufficient skilled professionals.
Proposed measures include imposing legal obligations on landlords, empowering regulators with enhanced enforcement powers, and supporting developers and social housing providers.
The government aims to complete the remediation of all high-rise buildings with unsafe cladding by the end of 2029, alongside significant efforts to remediate mid-rise buildings.
City said: “Under the plan, developers are expected to double the rate at which they fix their legacy buildings and this will be backed by investment in enforcement so that councils, fire and rescue authorities and building safety regulators have the capacity to tackle the higher volumes of cases each year. Overall, remediation acceleration (especially) in admin processes should be helpful for the sector.”
Housebuilding stocks fell after the Remediation Acceleration Plan was announced on Monday, but Citi believes there is a buying opportunity in the sector.
“We remain positive on the sector’s multi-year cyclical recovery even as we expect more sluggish improvement near term as we believe the sector’s normalised margin and returns on a medium-term view remain largely unchanged.
“As a result, the recent sell-off offers an attractive opportunity for investors to revisit the sector which stands to benefit from a housing market recovery on lower rates along with significant supply-side reforms.”