Barratt Reveals Extra Grenfell Cladding Works Bill Amid Profit Cheer

By PA
July 14, 2021 Updated: July 14, 2021

Housebuilder Barratt Developments has revealed a further hit for cladding safety works after the Grenfell Tower disaster, taking its total annual bill to more than £80 million ($110.9 million).

The group said it is setting aside around another £30 million ($41.6 million) for remedial works in the second half, leading to a full-year provision of about £81 million ($112.3 million).

It added that it is liaising with owners, management companies, and expert engineers on assessments of buildings it constructed and the works needed to support leaseholders and residents.

However, despite the cladding provisions, the group said it is expecting annual underlying pre-tax profits to be marginally ahead of expectations for between £761 million ($1 billion) and £812 million ($1.1 billion) after an excellent past year.

Statutory pre-tax profits, after adjusted items of around £107 million ($148 million), are expected at the top end of market forecasts.

Barratt had already hiked its outlook in May after a strong start to 2021 thanks to Britain’s booming property market.

The firm’s latest cladding bill marks a steep rise on its earlier provision of £4.1 million ($5.7 million) for the second half put by in May.

At the time, it said its costs so far totalled £163.1 million ($221 million) since 2017–18 for remedial cladding work on developments.

Firms across the sector have been working to address potentially unsafe cladding on buildings following the 2017 Grenfell fire, but many leaseholders have been left on the hook for huge sums of money to pay for the work themselves.

Barratt said: “We recognise that the complex issues surrounding fire safety guidance are causing distress for affected home-owners across the country.

“We will continue to dedicate significant focus to this area, as founding signatories to the Building Safety Charter and active members of the Government’s Early Adopters Group, which is committed to protecting life by putting safety first ahead of all other building priorities.”

The company’s full-year update shows a bullish stance even as the housing market cools following the ending of full stamp duty relief on June 30.

A report from Halifax last week showed that house prices fell by 0.5 percent in June—the first decline since January, indicating that the peak for buyer demand may have passed.

But housebuilders have been optimistic over the outlook, with rivals such as Persimmon and Visry recently reporting continuing strong demand.

Barratt said it is sticking to its sales goals, having notched up 17,243 home completions in the year to June 30.

Chief executive David Thomas said: “Whilst these are still uncertain times, we enter the new financial year in a strong position and remain focused on our medium-term targets, including delivering 20,000 homes a year.”

Its private homes selling price rose to about £325,000 ($450,400) in the year, up from £310,600 ($430,450) the previous year.

PA
PA