Homebuilder Paying for Building Safety Repairs in Wake of Grenfell Fire
(Bloomberg) -- Berkeley Group Holdings Plc is paying for repair works on some previous developments and assessing other buildings following a series of safety defects that have impacted hundreds of residents.
The housebuilder is contributing to costs for a London apartment block that burned down in 2019, as well as another complex in the capital where more than 1,000 people had to be evacuated over safety concerns, chief executive officer Rob Perrins confirmed in an interview. He declined to comment on the amount of the costs involved.
“We’re working through our buildings individually, we have 50 people full time on this,” Perrins said. “We’re down to a handful of buildings that still need to be resolved and we’re working through.”
Berkeley is one of the few large U.K. housebuilders that haven’t made specific additional provisions for safety issues as a crisis surrounding unsafe apartment cladding escalates. It’s instead paying for the repairs from existing provisions of 128.1 million pounds ($179 million) that covers remediations of all building issues, Perrins said. Other developers have collectively set aside hundreds of millions of pounds to help buildings meet new safety standards.
U.K. housebuilders are under pressure to pay more toward safety costs in the wake of the 2017 Grenfell Tower tragedy, when 72 people died after a building with flammable cladding caught fire. An ongoing inquiry has revealed a litany of bad construction practices and exposed flaws in developments throughout the country. The full cost of repairing potentially dangerous buildings may be as much as 15 billion pounds, according to an estimate by Parliament.
Shares in housebuilder Taylor Wimpey Plc fell in May when Bloomberg reported that the firm was covering costs for a defective block in addition to the 165 million pounds it’s set aside for safety issues.
Berkeley is contributing to the improvement of apartments in west London, where residents were ordered to evacuate last October after the owners decided the building wasn’t safe to live in. The housing association owner Notting Hill Genesis said Berkeley was helping to find a solution at the time.
The housebuilder is also paying toward repairs at Richmond House in Worcester Park, a complex built by a Berkeley unit where an apartment block burnt down in 2019. So far, it’s covered costs including the demolition of the building as well as recovering residents’ valuables after the fire.
An independent investigation after the Richmond House disaster found that the building had a design fault which led to problems with fire safety. A number of other Berkeley properties have since been found to fail fire safety regulations, and also need work done on them.
Perrins was commenting after Berkeley released earnings showing that revenue came in ahead of analyst estimates for the year through April, with profit before tax rising 3% to 518.1 million pounds. The company’s shares closed little changed in London on Wednesday.
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