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Barratt finds structural issues at eight buildings and expects £70m remediation bill
Barratt Developments has discovered issues with the concrete frames at eight of its buildings and expects to pay £70m to fix the issues.
The UK’s largest house builder took a decision to review the concrete structures at 26 of its buildings after “structural issues” were found at its Citiscape development in Croydon when removing aluminium composite material (ACM) cladding.
Residents of Citiscape were told to leave the block in September 2019 due to the structural concerns. According to the group’s year-end stock market notice, Barratt has now found “smaller-scale problems” at seven other developments.
Revealing the scale of the problems in its year-end results today, Barratt said: “Based on our current assessments, it is estimated that the total future costs for the required remedial programme at Citiscape, the review itself and any remediation required at other buildings will be around £70m.
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“We are actively seeking to recover costs from third parties, however there is no certainty regarding the extent of any financial recovery.”
Barratt had initially paid £2m to remove the ACM cladding on Citiscape for leaseholders who lost a tribunal and were forced to pay the bill.
When removing the cladding, structural issues were identified and independent structural engineers were appointed to undertake a full investigation of the building.
It then commissioned the engineers to review all of the other developments where concrete frames had been designed by either the same engineering firm or by other companies within the group that has since acquired it.
The year-end results also showed a fall in completions during the year as a result of the coronavirus pandemic.
The total number of completions fell by 29.4% from 17,856 in 2018/19 to 12,604 in 2019/20. The number of affordable home completions dropped by 31.1% from 3,578 to 2,466.
Barratt introduced a number of measures to manage its cash flow during the pandemic, including cancelling dividend payments, furloughing employees, suspending land-buying activity, and a 20% salary reduction for all executive directors.
The house builder said it has “incurred significant additional costs arising from COVID-19, including the controlled closure, hibernation and recommencement of our activities”.
It added: “While the economic outlook remains unclear, the group is in a strong position. We have a well-capitalised balance sheet, robust liquidity, a healthy forward sales position, a continued focus on the delivery of operational performance improvements across our business and an ongoing commitment to deliver high-quality homes across the country.”
Barratt followed fellow major house builder Redrow in calling on the government to extend the Help to Buy scheme beyond March 2021.
