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New coating commitment will cost Bellway an additional £300m

Homebuilder Bellway said a new commitment to address coating safety issues on properties it has built could cost it up to £300m, on top of the £186.8m already reserved for this problem.

The company says it will begin work as soon as possible to address fire safety issues on all buildings over 11 meters high that it has had a role in developing or renovating since April 1992. But she said the costs would not hamper her growth or returns to shareholders. .

Following discussions with the Department of Upgrading, Housing and Communities (DLUHC), Bellway said tenants should not have to pay the cost of remediation work to address “critical” safety issues. for life”.

Read more: Bellway reports strong first half but warns of potential costs

The deal will see Bellway withdraw its buildings from the Building Security Fund – set up by the government in 2020 to protect tenants – and ACM funds, and reimburse all costs to date.

A better estimate of further work means Bellway will set aside £300m on top of the £186.8m already earmarked for repair work, of which £128.3m remained at the end of January.

The costs will be accounted for as an adjusting item in the business’s annual results until the end of July 2022, and Bellway said its balance sheet was well capitalized – with net cash of £195.8m, a net asset value of £3.4 billion and committed debt. £530m facilities – meant he was well placed to deliver on the commitment.

A cost update – which includes estimates for repairing work done by its suppliers – will appear in the company’s preliminary results in October.

Bellway said it had already recovered £29.7 million from suppliers and contractors since 2017 and would continue to seek further recoveries from suppliers, subcontractors, professional advisers and others, in liability case. However, it was said that this was unlikely when the contractual terms had expired.

So far, Bellway has already completed repair work on four developments, is underway with 13 more and is in the design stages of three more – and stressed that the work was being carried out at no cost to residents, that whether or not the business owns full ownership of the building.

In an investor update, Bellway’s General manager Jason Honeyman said: “The issue of vital fire safety defects in apartment projects is an industry-wide challenge and Bellway has engaged extensively and constructively with DLUHC over the past few months at the both directly and through the Federation of Home Builders.

“We have always taken the issue of building safety very seriously and agree with the government’s principle that residents should not have to fund vital fire safety repairs.

“Our commitment to date and our commitment to continue our responsible approach has led Bellway to commit today that projects built by us or on our behalf over the past 30 years will be remediated. ‘a positive outcome for affected residents, achieved in the best long-term interests of the group and will help to secure our reputation as a leader in responsible homebuilding.”

As a result of these latest measures, the Bellway will set up a dedicated building security division, led by its own general manager, which will cover training and policy requirements for new programs and the remediation of existing programs. . He said the division would be well resourced with responsibility for liaising and negotiating with management companies, residents and others.

Bellway said assessments of its buildings will be carried out to meet a publicly available specification recently published by the British Standards Institute which came into effect in January this year and which the company said was more “pragmatic and proportionate”.

Fellow homebuilders Countryside and Vistry also joined the code and booked high costs, following Barratt, Redrow, Taylor Wimpey and Crest Nicholson earlier this week.