The problems will cost Barratt £70m, on top of hefty costs associated with the temporary closure of sites during the Covid-19 crisis.
Defects were found first on the Citiscape development in Croydon during post-Grenfell replacement of aluminium composite material (ACM) cladding. Issues have since been found on seven more.
On discovering the Citiscape problems, Barratt investigated 26 other developments that it had built with reinforced concrete (RC) frames. So far, eight have no defects while seven required “some remedial action to address smaller-scale problems”, the developer revealed today.
At these seven developments, remedial action has either now been successfully completed or is under way.
The Citiscape development in Croydon is a non-standard development which was designed for Barratt in 2001 by a third-party structural engineering firm and was sold to the current freeholder in 2003. After the Grenfell Tower fire, Barratt stepped up to replace the cladding even though it was no longer the owner of the building.
In its statement today, Barratt explained: “When the ACM cladding was removed from Citiscape in 2019, structural concerns were identified and we appointed independent structural engineers to undertake a full investigation of the building. These investigations have identified significant issues relating to the design of the building's reinforced concrete frame (RCF) requiring extensive remedial work. While we have no legal liability to cover the costs of this work, in line with our commitment to customers and recognising the responsibility we have for the work of our partners, we have taken the decision to pay for the required remedial action which would otherwise fall on leaseholders.”
It continued: “As a responsible developer, we appointed independent structural engineers to review all of the other developments where RCFs were designed for us by either the same original engineering firm or by other companies within the group of companies which has since acquired it.
“The preliminary reviews of all 26 of these developments, the majority of which were designed over 10 years ago, are complete and have not identified any issues as severe as those present at Citiscape. Engineers are now undertaking more detailed reviews to see if any remediation of the concrete frames is required. Those detailed reviews have so far shown that eight developments have no defects while seven developments required some remedial action to address smaller-scale problems. At these developments, remedial action has either been successfully completed or is underway.
“We apologise unreservedly to affected customers that the standards that we set for ourselves and our partners were not met at these developments. While in most cases we have no legal liability, in line with our commitment to put our customers first we will ensure that no costs associated with remedial works are borne by leaseholders.
“As previously disclosed, up to 31st December 2019, we had incurred £15.8m on Citiscape for both the costs of removing the ACM cladding and other voluntary assistance including the costs of providing alternative accommodation for residents. Based on our current assessments, it is estimated that the total future costs for the required remedial programme at Citiscape, the review itself, and any remediation required at other buildings, will be around £70m, with this charge, and the related cash outflow arising in FY20 and FY21. We are actively seeking to recover costs from third parties, however there is no certainty regarding the extent of any financial recovery.”
Barratt also said that while all of its current house-building sites are now back at work, an operating at increasing levels of productivity, there had been “significant additional costs arising from Covid-19 including the controlled closure, hibernation and recommencement of our activities. In addition, site durations are now expected to be extended, resulting in increased site costs.”