Northern housebuilders Bellway and Persimmon have signed up to the Government’s post-Grenfell scheme on building safety, confirming that it will cost them more than £850m.
The Newcastle and York-based firms have signed the Self-Remediation Terms (SRT) with the Department for Levelling Up, Housing and Communities (DLUHC), having signed up to the broad principle of the scheme last year. Major housebuilders have been told they will be blocked from construction schemes if they do not sign up the scheme, which was brought in after the Grenfell fire in 2017, but many were reported to be frustrated at a lack of detail from the Government on the programme.
In a statement to the Stock Exchange yesterday, Bellway said that signing up to the scheme was in both its own interests and that of homeowners. It said it would pay back the Government for £22.8m it had paid to improve safety at Bellway-built properties, and had set aside a total of £513.7m over the last five years to remediate apartment blocks it had built.
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Bellway chief executive Jason Honeyman said: “Bellway remains fully committed to acting responsibly with regards to building safety and we are making good progress, through our Building Safety division, on the remediation of legacy developments. Bellway has engaged extensively and constructively with DLUHC over many months, both directly and through the Home Builders Federation, which has ultimately resulted in the group’s decision to sign the Self-Remediation Terms.”
The company statement adds: “Bellway signed the Building Safety Pledge in April 2022, and the subsequent signing of the SRT has converted the principles of the Pledge into a binding agreement between Government and the group. Following the recent changes to fire safety guidance and related building regulations, the SRT provides clarity for future remediation, particularly with regards to the standards required for internal and external works on legacy buildings.
“The board has taken the decision that the signing of the SRT is in the best interests of both shareholders and residents of affected schemes, while also having regard to the consequences of not doing so under the Government’s proposed Responsible Actors Scheme (RAS). The RAS is expected to become law in the near future, and it will give the Government the power to prevent developers who have not signed the SRT from commencing developments for which they have planning permission, and from receiving building control approval for construction that is under way.”
Bellway said that it would provide an update on the progress of its safety works when it releases its interim results later this month. The company - which last month revealed that the housing market was cooling in the early part of this year - said the cost of the scheme “will not be detrimental to Bellway’s long-term strategic priorities”.
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Fellow Northern housebuilder Persimmon has also announced it is signing up to the scheme, saying: "The Self Remediation Contract's commitments are consistent with the principles first announced by Persimmon in February 2021. Over two years ago Persimmon led the industry in announcing that it would protect leaseholders from the costs of cladding removal or life-critical fire related safety remediation in buildings over 11 metres high constructed by the group.
"As confirmed in our 2022 Results, by December 31 2022, the group had incurred a total of £350m relating to provisions and costs (including those due to DLUHC for remediation already carried through the Building Safety Fund) for claims for building safety remediation. The group believes this provision remains sufficient."
The deal will compel the companies to find any buildings they constructed that are deemed unsafe and fix them "as soon as reasonably practicable", the Government has said. They will also have to report to the Department for Levelling Up, Housing and Communities (DLUHC) on their progress once a quarter.
Away from the North, builders Redrow and Crest Nicholson have also signed up to the terms.
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