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Major house builder sets aside almost £50m to rectify fire safety issues
Bellway has set aside £46.8m to cover fire remediation work on its existing portfolio, the house builder’s preliminary results have shown.
In the year leading up to 31 July 2020, the house builder set aside the funding “as an exceptional charge as part of its commitment to help owners of legacy apartment schemes undertake fire safety improvements”.
Bellway previously reported that a number of its completed developments may not comply with government guidance issued in the wake of the Grenfell Tower fire, despite them being signed off by building control at the time of completion.
The house builder said it has undertaken a site-by-site assessments of its portfolio of legacy apartment schemes and took the decision to put aside the £46.8m as a result of this.
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Last week, Inside Housing spoke to a leaseholder living in a Bellway-built block in Manchester who is facing a £30,000 charge for remediation work if the building’s application to the government’s Building Safety Fund is unsuccessful.
Bellway has not yet committed to funding the work if the application fails.
It comes as Bellway reports a 64.3% drop in pre-tax profits from £662.6m between July 2018 and 2019, compared with £236.7m in the most recent year. The group’s revenue dropped 30.7% from £3,213.2m to £2,225.4m.
The house builder said its financial performance has been significantly affected by the COVID-19 pandemic, with the number of completions falling 30.9% from 10,892 to 7,522.
Bellway also incurred a non-exceptional coronavirus expense of £18.9m in relation to extended site durations and enhanced health and safety requirements.
A further charge of £3m was recognised by the board in relation to assets held by Bellway that were originally sold on a leasehold basis.
Last month, the Competition and Markets Authority (CMA) launched enforcement cases against four major house builders as part of its investigation into unfair leasehold agreements.
The CMA has not launched an investigation into Bellway, however the £3m charge was recognised due to the market demand for bulk freehold portfolio disposals of houses being “severely limited”.
Going forward, Bellway said it expects to spend an additional £3,000 to £4,000 per new build plot following conversations with the government around upcoming changes to the energy efficiency standards of new build homes.
