Redrow PLC (LSE:RDW) is to make an additional provision of £164mln for cladding repairs as it became the latest housebuilder to sign up for the government’s Building Safety Pledge.
The builder said historically it had not been a major constructor of high-rise apartments with the majority of its high-rise apartments built between 2000 and 2010, but believes the housebuilding industry should play its part in resolving the issue of legacy fire safety.
Housing Secretary Michael Gove announced in January he wanted the developers to pay for the removal of dangerous cladding from apartment blocks in the wake of the 2017 Grenfell Tower disaster in London.
Builders had until yesterday to register for the Pledge, which commits the industry to remove cladding and institute fire safety measures at buildings above 11 metres in height and built within the last 30 years.
Persimmon PLC (LSE:PSN), Taylor Wimpey PLC (LSE:TW.) and Crest Nicholson PLC (LSE:CRST) all announced yesterday they had signed up, with Crest saying it would cost it an extra £80mln-£120mln.
Redrow had already set aside £36mln for work on blocks it built itself but said this would now be expanded to all buildings covered by the Pledge that it was involved in.
This £164mln additional cost will be treated as an exceptional item in the results for the 2022 financial year, said the statement.
“We will work with leaseholders to remediate their buildings and, where possible, pursue recoveries from main contractors, warranty providers and other third parties,” it added.
The Building Safety Pledge is on top of the Residential Property Developer Tax, which is levied at 4% of pre-tax profit and that came into effect on 1 April 2022.
Shares in Redrow eased 1.6% to 516.5p and have now fallen 27% since Michael Gove’s January announcement.