Barratt checking over 200 buildings in widened safety review

The house builder revealed that so far it has spent or set aside £220m on legacy properties but revealed that present provisions of £74m to cover future remediations could rise subject to the outcome of the final building review.

David Thomas, chief executive, revealed Barratt was in talks with Government around its plans to get house builders to fund wider safety remediation work on buildings from 11-18m in height.

The Government is now calling on developers to stump up cash to fix the cladding crisis on intermediate height buildings of around four to seven storeys.

Levelling Up and Housing Secretary Michael Gove has given firms until early March to agree fully-funded plans of action warning he will take punitive action against firms failing to do so.

Thomas said: “We established an in-house Building Safety Unit in July 2021 which has brought additional expertise and resources to our existing review of our historic multi-storey buildings of all heights in light of evolving Government guidance on building safety. 

“At 31 December 2021, 206 buildings over 11 metres were part of the ongoing review.

“Discussions are ongoing and we will continue to work constructively with Government to ensure leaseholders are protected.”

He added: “Throughout its existing review the group has been reviewing buildings of all heights and a provision has already been recognised for the rectification of buildings over 11 metres for which the group is liable or had made a commitment at the reporting date.

“It is possible that further commitments may be made by the group as work progresses or as Government legislation or regulations develop.”

Thomas revealed further uncertainty about final outturn costs amid the Government’s latest ultimatum on building safety as he reported results for the first six months of the year.

Despite a small fall in completions during the first half due to efforts to step up building starts, he said Barratt was on track to deliver total home completions of 18,000 – 18,250 at the full year.

This would be an increase of  250 homes on previous guidance and in excess of the total home completions delivered in the 2019 pre-pandemic year.

Pre-tax profit remained flat at £433m from revenue down 10% to £2.25bn.

Despite the slowdown in growth, Barratt continued to generate strong reserves up 2% to £1.13bn, after significant incremental investment in land and work in progress.

The firm also lifted its forecast on construction cost inflation for the full year to 6%.