Barrister reported as saying Gove would be acting unlawfully if he sought to hinder housebuilders from trading

Housebuilder Persimmon is understood to have sought legal advice from a QC over the government’s threat to stop housebuilders from trading if they don’t pay into a “voluntary” fire safety repair fund.

The housebuilder declined to comment after the Times reported on Saturday that Lord Pannick QC had advised it that housing secretary Michael Gove is acting unlawfully in threatening builders over an estimated £4bn bill for repairs to mid-rise blocks of between 11m and 18m in height.

The newspaper said Persimmon’s chief executive, Dean Finch, had written to the Department For Levelling Up, Housing and Communities, stating that “Persimmon has been advised that it would be unlawful for the secretary of state to implement his suggested sanctions of imposing penalties on developers who decline to enter into the proposed agreement, for example by calling-in planning applications, removal of developers from the Help to Buy scheme and the proposed ban from competing for future contracts with Homes England”.

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Persimmon has been told Gove’s threat is ‘unlawful’

In a letter sent on 4 February, Gove also threatened to stop housebuilders from trading if they didn’t sign up to a heads of terms agreeing to pay an undisclosed sum into the fund.

The Times said Dean Finch’s letter to the department added: “To paraphrase his clear advice, Lord Pannick has said these sanctions would, if implemented, be unlawful primarily because the secretary of state is threatening to penalise the developers for declining to do what they have no legal obligation to do and is proposing to penalise them by … using powers conferred for different purposes.”

Housebuilders have branded the government’s move, which comes on top of the introduction of a £2bn levy to pay for high-rise repairs and £1bn spent by housebuilders repairing their own buildings, as “quasi Marxist”.

While the housebuilders’ trade body, the HBF has been open about the fact it is taking legal advice over the government’s threat, individual housebuilders initially appeared reluctant to break cover and publicly criticise the government.

However, last week Redrow chief executive Matthew Pratt became the first to do so, branding Gove’s threats as “unrealistic” and “inequitable”.

Pratt said: “I don’t think anyone can sign a deal that says ‘you will give me anything I want’. Which basically [is saying that at] the end of the year ‘we’ll tell you how much it [the cost] is and you’ll sign up to say you’ll give us it.’ Nobody can sign up to that, it’s unrealistic.”

Gove’s threat follows his decision, announced last month, to protect leaseholders entirely from the costs of fire safety repairs to homes now deemed to be at risk, and instead to attempt to get housebuilders and materials manufacturers to pay into a £4bn fund. The bill is in addition to the cost of paying for the repair of problems on homes they themselves have built.

However, housebuilders dispute the £4bn price tag, and say that other developers, contractors, designers, subcontractors, insurers and government should all share the cost.

A spokesperson for the department said: “We expect industry to pay to fix unsafe buildings - nothing is off the table.

“At a recent meeting, bosses of the country’s biggest developers agreed leaseholders should not pay. Now we need a fully funded plan from them by early March. If not, we will impose a solution in law.”