It’s been just over five years since a tower block fire in Kensington killed 72 people. The Grenfell tragedy prompted a reckoning in building standards in the UK that is still ongoing, and no clearer evidence of this can be found in listed housebuilders' latest set of results.
This month, Redrow (RDW), Barratt Developments (BDEV) and MJ Gleeson (GLE) all posted their numbers for the year to 30 June, while Vistry (VTY) published its half-year figures. All four revealed the extent to which dealing with all fire safety issues on buildings over 10 metres tall dating back 30 years has impacted their businesses. The quartet was pushed to make the pledge to fix those problems by then housing secretary Michael Gove, and the results reveal it has cost them a combined £656mn for that accounting period alone. Righting the wrongs of Grenfell has slashed their pre-tax profit by around 40 per cent on average.
You might not know this from reading the press coverage of these results, though. “Underlying” and “adjusted” profits at the top of these housebuilders’ RNS announcements boast “record” figures and a return to “pre-Covid” trading conditions, and many headlines have run with these numbers. Such figures are compiled on the basis that the costs involved in paying for cladding are exceptional events. That makes sense from an accounting standpoint. But these costs might not prove one-offs if, as some have urged, the government decides to widen the type of buildings for which companies must pay remedial amounts.