The government has confirmed a new £1bn fund to replace dangerous cladding will not be available to people in buildings where work has already started.
A condition has been imposed that no cash will be provided for projects already under way when the government announced its fund in March.
Residents of the Skyline tower block in Manchester say the news is a huge blow.
They say they were “petrified for their financial futures” after taking out loans to remove dangerous cladding.
‘Heartbroken and petrified’
The Ministry of Housing, Communities and Local Government (MHCLG) said the new money was to remove the financial barriers preventing building owners from going ahead with remediation work.
Residents of the Skyline building have already been required to take loans of thousands of pounds to pay for work to remove dangerous and faulty laminate panels.
Skyline residents tweeted: “We are heartbroken and are once again petrified for our financial futures thanks to the decision to exclude us from the fund.”
Asked by the BBC whether the Skyline building could be considered for the funding as an exception, the MHCLG said: “Where leaseholders have already committed to paying for the cost of remediation, there may be recourse to building owners through warranty or insurance claims.”
The government had already committed to pay for the removal of Aluminium Composite Material (ACM) cladding, which it regards as posing the greatest fire risk.
ACM was the type installed at Grenfell Tower, where 72 people died in a fire in June 2017
But it delayed extending the funding to other materials, including High Pressure Laminate (HPL) cladding formed from paper and resin and widely used on modern buildings.
Critics say the government also delayed carrying out fire tests on HPL cladding.
The results of a private test passed to the BBC, showed it could burn almost as quickly as ACM cladding.
Before the government’s new funding was announced the owner of the prominent Skyline tower wrote to residents saying they would be liable to pay thousands of pounds to have the HPL on the building removed.
People living there said they were given no option but to take out “life-changing” loans to pay for the work.
The hope was that the government’s new fund would come to the rescue.
But when the details were published this week it became clear it would only apply to projects “committed to” or begun after the announcement on 11 March.
The government is keen to limit its funding to schemes which would be delayed if public money was not available.
Although the Skyline case has been widely publicised it is currently not clear whether other buildings will be affected by the new rule.
The MHCLG said: “We’re determined to keep residents safe – that’s why we’ve published details of our £1bn fund to remove unsafe cladding from buildings and ensure this happens quickly.
“We expect building owners to take immediate action to make their buildings safe and we have reached an agreement with local leaders so that this important work can continue safely during the pandemic.”