Barratt Developments has put aside £192m to remediate dangerous buildings.
In a trading update published this morning (10 July), the housebuilder said the “legacy property” sum includes £61.9m relating to increased contingency for fixing fire safety and external wall systems, from the first quarter of the year to June 2024.
But Barratt also revealed £130m worth of expenditure relating to concrete frames in two developments in London, and other fire safety problems.
It also suggested that it could have to put further money aside for fixing buildings in Scotland. So far it has made provisions for buildings in Scotland “on a consistent basis with England and Wales”. However, extra costs could be incurred due to the Scottish Safer Buildings Accord, which the group signed in May.
“As these negotiations advance, we will further update the market,” the housebuilder said.
The latest trading update comes after Barratt’s 2023/24 financial year ended on 30 June, with full results set to be published on 4 September.
Construction News asked Barratt how much it had already spent remediating buildings in the UK, but had not received a reply by the time of publication. However, the latest provisions mean the housebuilder has put aside £807.6m over its past three financial years, having allocated £434.6 and £180m in its 2021/22 and 2022/23 financial years respectively.
As well as the funds set aside to deal with cladding, the housebuilder said it has reserved £23m to cover costs around its proposed £2.5bn acquisition of Redrow. The Competition and Markets Authority (CMA) is currently investigating the planned merger over concerns it could “result in a substantial lessening of competition”.
Barratt Developments chief executive David Thomas said this morning: “We are pleased that the proposed combination with Redrow was strongly supported by both sets of shareholders in the spring and, subject to the CMA’s approval, we look forward to bringing together two businesses to create an exceptional UK housebuilder ensuring we are well-positioned for the future.”
Barratt expects the CMA to publish its decision by 8 August.
Thomas also celebrated a “strong operational performance”, after Barratt sold 7,239 homes in the year to 30 June 2024, at a value of £1.9bn. Barratt completed 14,004 homes in the same period.
Looking ahead, Barratt expects total build cost inflation to “abate” in the coming months, after it reached 5 per cent in the past financial year.
Barratt is also facing a second investigation by the CMA, after the competition regulator launched a probe in February into “suspected anti-competitive conduct” by eight housebuilders, including Barratt and Redrow.
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