Kingspan, one of the firms that has given evidence at the Grenfell Inquiry, saw its share price fall seven per cent following Gove’s letter.
Saint-Gobain, the parent company of another firm linked to Grenfell Celotex, saw its share price slump more than five per cent.
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In his letter, Gove said the three firms most closely associated with Grenfell, understood to be Kingspan, Celotex and Arconic, had made a combined profit of more than £700m since the fire, which killed 72 people in 2017.
Meanwhile, other housing firms also saw sharp falls with Barratt, Bellway and Berkeley Group all down more than five per cent in trading by noon on Monday.
Gove has maintained that leaseholders and other residents who were previously facing bankruptcy and homelessness over bills to remove cladding and fix fire defects should not pay for repairs to their homes.
Since taking over as housing secretary in September, Gove has taken a hardline stance against housing developers and intervened to force Mercedes Formula One team to back down from a sponsorship deal with Kingspan.
Gove also ordered Rydon Homes to be blocked from the government’s Help To Buy loan scheme due to the firm’s links to Grenfell.
Last week Gove also held a roundtable with some of the biggest developers in the country in a bid to force them to pay £4bn to remediate apartment blocks.
Following the meeting, one executive told The Telegraph that Gove’s forceful approach had angered housing bosses. The executive said: “He didn’t threaten to kill my children, but everything else was on the table. You wouldn’t expect Shell to pick up the costs of a BP oil spill.
“We don’t have any problem at all with cleaning up our own mess, and we’re paying the additional tax on top of that, but this is yet another ask.”
In Sunday’s letter, Gove pointed out that the money he is seeking will go alongside the government’s remediation programme and £5.1bn Building Safety Fund.
Gove added: “Our home should be a source of security and pride. For too many of the people living in properties your industry’s products helped build in recent years, their home has become a source of misery. This must change.”
Leaseholders hit by the building safety crisis welcomed Gove’s letter. A spokesperson for campaign group End Our Cladding Scandal said: “We need to see this actually lead to firm action.”
Arconic and Kingspan declined to comment on Gove’s letter. However, Irish firm Kingspan responded to Gove’s call for developers to pay for cladding costs, A Kingspan spokesperson said: “Kingspan welcomes the plans for industry dialogue and the helpful clarity that should bring for all stakeholders.”
The Construction Products Association has requested a meeting with Gove and his department to clarify the details behind the government’s proposals. The move follows a series of meetings in recent weeks to discuss complexities around the issue.
A spokesperson for the CPA said: “We are happy to work with government and our members in the spirit of cooperation to address these issues.”
Celotex has also been approached for comment.