Today the Government announced additional funding to protect flat owners from the cost of remediation work due to fire safety issues. This is potentially very encouraging, but we are clarifying the impact on the Regional Capitals fund’s position with the Government.

This announcement is welcome news with regard to the wider issue in the market, as it increases the funding available from £1.6bn to £5bn and is aimed at covering the entire cost of replacing dangerous cladding in high-rise buildings in England (i.e. 18m or above).

Owners of flats in lower-rise buildings, which are considered to be between 11 and 18 metres, will be able to fund the work through a long-term, low-interest, government-backed financing arrangement, which is capped at £50 a month.

All units that we know are currently affected by this issue in our portfolio fall into the high-rise category.

We are seeking confirmation of the impact that this announcement will have on the Regional Capitals fund.

You may recall from previous communications that there was previously a state aid cap on the benefit that corporate entities can receive from the Government’s funding, which was limited to €200,000 based on legacy EU rules.

Last month, we discussed the state aid cap with a senior official at the Ministry of Housing, Local Government and Communities (MHLGC) and were told that it was under review.

In today’s announcement, we noted that the Government referred to “all leaseholders” being protected from the cost of work, which may indicate that the cap is going to be removed. However, it is too early to know for sure. We have been in touch with MHLGC today to ask for clarification and are awaiting their response.

The Regional Capitals fund currently holds a cost provision of approximately £1.4m for potential remediation work in our properties. If the state aid cap were to be removed, we would be able to reduce this provision as each building in our portfolio is declared eligible for government funding.

We will be in touch as soon as we know more.