We are writing to update you following this week’s announcement by Michael Gove, the Secretary of State for Levelling Up, Housing and Communities, that the Government is now demanding that developers fund the remediation of unsafe cladding on buildings that are 11-18m high, and will impose a solution in law if necessary.

The proposed fund replaces the previously announced loan scheme, whereby leaseholders in 11-18m buildings would repay a maximum of £50 per month.

It is a positive development for the market at large that the Government is moving away from the position of forcing leaseholders to bear the costs of remediation work for fire safety issues.

However, the proposal’s remit is narrow, effectively for five and six storey buildings only, and does not extend to fire safety issues beyond cladding. Many buildings face issues relating to fire compartmentation and fire breaks, which will require remediation work that will still be funded by leaseholders.

We expect it to have very minimal impact on properties in the Regional Capitals fund. The fire safety issues with Regional Capitals properties are primarily in buildings above 18m, which is covered by the Building Safety Fund. However, there is a restriction on funding which limits these grants beyond £335,000.

We will continue to follow this situation and will be in touch again if there is any significant development. In the meantime, we will be sending all investors an update shortly regarding the upcoming dividend.

While we will also be publishing our regularly scheduled update in March, we wanted to let you know that property sales are progressing. We have sold or have under offer 47% of London properties and 30% of Regional Capital properties. We continue to sell assets in an orderly fashion as they become saleable when fire safety works are completed.