The blaze at Grenfell Tower in London killed more than 70 people and revealed the widespread use of cheap flammable cladding on apartment blocks across the country, requiring expensive removal or round-the-clock fire watches.
Shares in developers fell on Monday after housing minister Michael Gove set an early-March deadline for the industry to agree a fully funded plan of action, including a dedicated fund to deal with unsafe cladding.
FTSE-100 builders Persimmon, Barratt Developments , Berkeley, and Taylor Wimpey were all trading about 2% lower in early deals.
The government has already committed around 5 billion pounds for repairs so far, and last year imposed a levy on housebuilders to raise 2 billion pounds towards the cost over the next 10 years.
It has so far targeted the removal of cladding on high-rise properties. The announcement on Monday is designed to remove cladding on buildings between 11 and 18 metres high where tenants had been facing bills of tens of thousands of pounds to remove cladding.
“It is neither fair nor decent that innocent leaseholders, many of whom have worked hard and made sacrifices to get a foot on the housing ladder, should be landed with bills they cannot afford to fix problems they did not cause,” Gove said.
He said the government would take all steps necessary to make the industry pay, including restricting access to government funding and future procurements, the use of planning powers and the pursuit of companies through the courts.
If the industry failed to take responsibility, the government would if necessary impose a solution in law, he added.
The government has faced heavy criticism that it has taken this long, with some leaseholders unable to sell their properties when faced with bills that cost more than the value of the apartment itself.
The cladding used on the Grenfell block was identified as central to the rapid spread of the fire. ($1 = 0.7359 pounds)