The UK government has set a six-week deadline for developers to sign the legal binding contract that commits them to pay to fix unsafe buildings.

It has warned companies that fail to sign and comply with the terms of the contract of significant consequences.

As per the legislation to be brought forward in spring this year, the Secretary of State for Levelling Up, Housing and Communities will have powers to stop developers from operating freely in the housing market if they fail to sign and comply with the remediation contract.

Drawn up by the Department for Levelling Up, Housing and Communities, the contract will safeguard thousands of leaseholders across England, who otherwise would have to pay for repairs for grave safety defects, including non-cladding associated issues.

As per the contract, developers will be required to commit an estimated £2bn or more for repairs to buildings that are 11m or above which they developed or refurbished over the last three decades. It implies that along with the Building Safety Levy, the industry will be directly paying an estimated £5bn to make their buildings safe.

Furthermore, the contract also stipulates developers to reimburse taxpayers where public money has been used to repair unsafe buildings.

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UK Secretary of State for Levelling Up, Housing and Communities Michael Gove said: “Today marks another significant step towards righting the wrongs of the past and protecting innocent leaseholders, who are trapped in their homes and facing unfair and crippling costs. Too many developers, along with product manufacturers and freeholders, have profited from these unsafe buildings and have a moral duty to do the right thing and pay for their repair.

“In signing this contract, developers will be taking a big step towards restoring confidence in the sector and providing much needed certainty to all concerned. There will be nowhere to hide for those who fail to step up to their responsibilities – I will not hesitate to act and they will face significant consequences.”

House builder Persimmon is the first to sign the contract.

Persimmon group CEO Dean Finch said: “The publication of the developer remediation contract is the culmination of many months of hard work on all sides and we are pleased to confirm our intention to sign the final document in the near future, becoming the first developer to do so.”