The announcement comes in the wake of the 2017 fire at the west London tower block that killed more than 70 people, with cladding blamed for the rapid spread of the blaze.
The money will be made available to building owners to remove aluminium composite material cladding, with the government declaring: “If these reckless building owners won’t act, the government will.”
Some building owners have yet to take action two years on from the fire, with some trying to make leaseholders foot the bill for replacing aluminium composite material cladding.
Prime Minister Theresa May said “too many are continuing to pass on the costs of removal and replacement to leaseholders”.
Campaigners have welcomed the announcement, while Labour said it was “astonishing” the government was only acting now.
Grenfell United, a group of survivors and the bereaved, said it offered hope to people feeling at risk at home.
“This result is a testament to residents themselves, in social and private blocks, who refused to be ignored,” the group said.
“The truth is we should never have had to fight for it.”
Labour’s shadow housing secretary John Healey said: “It is welcome that the government is finally giving some help to worried residents in private blocks with Grenfell-style cladding, but it is astonishing that it has taken ministers almost two years to act.
“The government must now back the further steps Labour has been calling for, toughen the sanctions to get this work done and set a deadline to make all blocks safe.”
Communities Secretary James Brokenshire said inaction from building owners had compelled the government to act.
“Although temporary measures are in place to ensure people living in these buildings are safe, too many owners are treating this as a permanent fix,” he said.
“Others are trying to pass on the costs to residents by threatening them with bills running to thousands of pounds.
“While some building owners have been swift to act, and I thank them for doing the right thing, I am now calling time on the delay tactics of others.
“If these reckless building owners won’t act, the government will.”
Mrs May said: “It is of paramount importance that everybody is able to feel and be safe in their homes.
“That’s why we asked building owners in the private sector to take action and make sure appropriate safety measures were in place.
“And we’ve seen a number of private building owners doing the right thing and taking responsibility, but unfortunately too many are continuing to pass on the costs of removal and replacement to leaseholders.”
Lord Porter, chairman of the Local Government Association, said: “This announcement will come as an enormous relief to leaseholders who are in no way to blame for the dangerous cladding on their homes. They have suffered for far too long.
“Since the LGA first raised their plight in 2017, we have been working with MHCLG [Ministry of Housing, Communities and Local Government] to ensure the Treasury provided the necessary funding, and it is great that we have been listened to.
Building owners will be able to register for the fund by early July and will then have three months to claim the money.
One condition attached to the funding will be for them to take “reasonable steps” to recover the costs from those responsible for the cladding’s presence.
A total of 166 out of 176 private buildings identified with the cladding following the fire have yet to begin removing the material.
Developers and building owners, including Pemberstone, Aberdeen Asset Management, Barratt Developments, Fraser Properties, Legal & General, Mace and Peabody, have fully borne the costs for their buildings.
The government has already promised to fund the replacement of cladding on high-rise buildings in the social sector, with 23 blocks still covered in it.
Author: Alan McGuinness