Homebuilders Crest Nicholson and Persimmon accept building safety pledge to help fund removal of hazardous coatings
- Neither company will be allowed to use money from the state building security fund
- Crest Nicholson said the engagement could leave him between £80m and £120m in additional costs
- Persimmon said the £75m he has set aside for the affected homes should be enough
Two of Britain’s largest homebuilders have signed the Building Safety Pledge to help address fire safety issues in mid-rise buildings.
Persimmon and Crest Nicholson have agreed to fund the removal of hazardous coatings and the remediation of buildings they have constructed over the past three decades that are between 11 and 18 meters high.
The former company said the £75m it had already earmarked for the affected homes should be enough, but the latter said the new guarantee could leave it between £80m and £120m in additional costs.
Persimmon and Crest Nicholson have agreed to fund the removal of hazardous coatings and the remediation of buildings between 11 and 18 meters tall that they have constructed over the past 30 years
Crest has already spent £47.8m tackling the issues and has started paying a 4% tax on all of its profits from UK residential property development since the start of this month, which will be used to remove hazardous coatings.
Neither company will be allowed to use money from the UK Government’s Building Safety Fund for their work, although recent reports suggest the UK housing construction industry will not have to contribute to a fund £4 billion pavement remediation.
Work to fix critical fire protection flaws in housing estates across Britain has received urgent attention following the 2017 Grenfell Tower tragedy, which was the deadliest structural fire of the UK for nearly three decades.
Since early January, property developers have been in discussions with the Department of Planning, Housing and Communities (DLHUC) to try to reach an agreement on the financing of these measures.
Housing Secretary Michael Gove has repeatedly warned companies in the sector that they could face significant financial or trade penalties if they fail to reach an agreement.
These could include restricted access to public funding, the removal of building permits, the introduction of new legislation to force them to pay for the removal of cladding and even a possible closure of operations.
Housing Secretary Michael Gove has repeatedly warned homebuilders they could face significant penalties if they fail to reach an agreement on fixing fire safety issues
Crest said he believes signing the Building Safety Pledge is “in the best interest of the group, taking additional steps to support people living in affected buildings.”
He said: ‘Failure to accept these new guidelines would result in further consequences, implemented by the DLUHC (Department for Leveling Up, Housing and Communities), which would impact the group’s ability to operate and trade normally on the housing market.
“The outflow of funds needed to clean up the buildings affected will be spread over several years.
“Given the group’s well-capitalized financial position and strong current business performance, the board does not consider this to pose a risk to current or future operations.”
Dean Finch, Group Managing Director at Persimmon, remarked: “Over a year ago, we said that tenants of multi-storey buildings built by Persimmon should not have to pay for resurfacing. and fire-related issues.
“We are pleased to reaffirm that commitment today and sign the Government’s Pledge for Developers.”
Homebuilder Bellway said last week when releasing its half-year results that it would incur a “significant additional provision” if it were to self-fund fire safety issues over the next 30 years.
Nonetheless, the financial health of the homebuilding sector has improved significantly over the past year since the end of the first nationwide Covid-19 lockdown in the summer of 2020.
This was spurred by a stamp duty holiday in England and Northern Ireland, record interest rates and soaring property prices, and pent-up demand for new and larger properties where people could work. home.
Shares of Crest Nicholson Holdings were down 3.1% at £2.68 late Tuesday afternoon, while shares of Persimmon were down 0.95% at £21.89.