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House builders’ shares slide as government unveils cladding plans

All of the UK’s largest house builders have seen their shares drop this morning following the news that the government will force developers to foot a £4bn bill for cladding remediation on medium-sized buildings. 

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Picture: Getty
Picture: Getty
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Barratt, Persimmon, Taylor Wimpey, Bellway and Vistry Group all saw their shares drop following the announcement of Michael Gove’s cladding remediation plan #UKhousing

Barratt, Persimmon, Taylor Wimpey, Bellway and Vistry Group all took a hit following the announcement of housing secretary Michael Gove’s plans, which will see developers given until March to commit to funding remediation before facing other consequences. 

Shares in Barratt fell 3.7% from the start of trading until 12:20, Persimmon dropped 4.45%, Taylor Wimpey was down 2.14%, Bellway fell by 3.48% and Vistry Group was down 2.61%. 

As reported over the weekend, the government’s new plan to tackle the building safety crisis will see developers asked to agree the terms of a new deal aimed at protecting leaseholders from having to shoulder the burden of fire safety costs. 

As part of the deal, developers must agree to make financial contributions to a fund to cover the full outstanding cost of remediating unsafe cladding on buildings between 11 and 18 metres at an estimated total cost of £4bn.

They must also fund and undertake all necessary remediation of buildings taller than 11 metres which they played a role in developing, as well as provide comprehensive information on blocks taller than 11 metres with fire safety defects that they played a role in constructing over the past 30 years. 

The government has not yet confirmed which companies will be in scope of the deal, but said it expects to cover all firms that have an annual profit of more than £10m from housebuilding. 


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This will see a much greater number of developers forced to make contributions towards remediation work than the developer levy the government committed to at last year’s Spending Review, which was to be levied against developers that accrue profits of over £25m.

In response today’s announcement, Stewart Baseley, executive chair of the Home Builders Federation, said leaseholds should not have to pay for remediation work, but said the UK’s largest house builders “have already spent or committed approaching £1bn to remediate affected buildings and the recently announced Property Developers Tax will raise billions more”.

He said the largest house builders “only built a minority of the affected buildings” and other parties must be involved in covering remediation costs, including “material manufacturers who designed, tested and sold materials that developers purchased in good faith that were later proved to not be fit for purpose”.

A spokesperson for Taylor Wimpey said it has already announced funding to undertake fire safety improvement works to all blocks it constructed in the past 20 years irrespective of height, which covers what the government is proposing today. 

“There are many organisations involved in the issue of fire safety, including large business in our supply chain and indeed government themselves, and so the proposed response must recognise this,” the spokesperson added. 

A spokesperson for Bellway said the firm has already put aside £164.7m for fire safety work and will review the government’s proposals over the coming weeks. 

The government has said it will host a series of roundtables with ministers, developers and leaseholders. This will begin with the 20 biggest house builders in the sector being invited into government to start discussions.

If developers do not commit publicly to the new framework by early March, Mr Gove has threatened to take other steps such as restricting access to government funding and procurement, the use of planning powers and pursuing companies through the courts. 

If industry fails to take responsibility, the government will also consider “the imposition of a solution in law if needs be”, Mr Gove said. 

Inside Housing has contacted Barratt, Persimmon, Bellway and Vistry Group

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