Stormont Finance Minister Conor Murphy revealed the plan following a meeting with leaseholder representatives of Victoria Place Apartments.
That building has aluminium composite material (ACM) cladding installed on sections.
Mr Murphy said the Executive approved the establishment of the fund on July 8 to remove ACM cladding from private residential buildings over 18 metres.
“Since then my department has worked at pace on development of the remediation fund,” he said.
“We are currently finalising the scheme design and eligibility criteria. Next month the fund will open for applications and we will also be publishing a call for evidence to identify any other buildings over 18 metres with combustible ACM cladding which have not yet been identified.
“This fund will protect leaseholders from the cost of replacing unsafe cladding on their homes, provide homeowners with reassurance and bring confidence to the housing market.”
South Belfast MP Claire Hanna welcomed the announcement.
“The minister has committed this funding in light of serious safety issues being discovered in this building and we hope that following the scoping exercise and call for evidence that a precedent will be set for other buildings found to have ACM cladding,” she said.
“A combination of determination and sustained pressure from residents, along with representation, has ensured that the minister listened to the plight of those living in Victoria Place and a fund has been secured for the work to be carried out.
“We must now recognise the need to legislate to protect leaseholders from remedial costs when buildings are determined to be unsafe.”
A major review of the cladding used on multi-story buildings began following the Grenfell fire tragedy of 2017, when 72 died after a fire broke out in the London tower block.
In February the UK government unveiled a five-point plan to provide reassurance for homeowners and to ensure confidence to the housing market.
The £5 billion is being targeted, the government said, at the “highest risk buildings in line with independent expert advice and evidence,” with Home Office analysis of fire and rescue service statistics “showing buildings between 18 and 30 metres are four times as likely to suffer a fire with fatalities”... than apartment buildings in general.