Remediation costs drive £248m liability for Barratt Redrow

Barratt Redrow has taken a £248m hit from legacy liabilities related to fire safety and reinforced concrete defects, following its £2.5bn acquisition of rival housebuilder Redrow.

The costs, recognised as adjusting items, include £98m of new liabilities uncovered in the second half of the year to 30 June, according to a market update ahead of the company’s results due in September.

Of this, £80m relates to fire safety defects at a development of four buildings completed in 2002 in the South of England, while a further £18m covers issues including concrete frame remediation at a major London site already included in the group’s external wall system (EWS) portfolio.

The cost of addressing risks across Barratt’s EWS portfolio has remained broadly stable, the statement said, with a £16m rise in estimated spend offset by equivalent cost recoveries during the second half.

However, further liabilities emerged from an internal review of Redrow’s reinforced concrete frame buildings.

Barratt now expects to undertake remediation works at up to five London developments, prompting a downward revision of Redrow’s opening balance sheet by £150m.

The adjustment has led to a £106m reduction in goodwill, net of deferred tax.

The group said it continues to seek cost recovery from third parties, citing a Supreme Court judgment secured on 21 May, which clarified that companies across the construction supply chain share responsibility for defects. 

The ruling supported developers who proactively address building safety issues prior to litigation.

Overall, Barratt Redrow posted a steady performance in the year to 29 June 2025, with adjusted pre-tax profit expected to align with market forecasts, despite ongoing pressure on private sales and completions.

The group completed 16,565 homes during FY25, down 7.8 per cent on the previous year’s combined Barratt and Redrow total, and slightly below its guided range due to weaker demand in London from overseas buyers and institutional landlords.

However, improved net reservation rates, which rose to 0.64 per outlet per week, provided support during the second half.

Adjusted items of approximately £229m were recorded in the year, including £98m of new fire safety and structural remediation charges, £66m of reorganisation costs tied to the Redrow merger, and £29m relating to commitments made under a Competition and Markets Authority investigation.

Julie Palmer, partner at Begbies Traynor, said: “Barratt’s performance reflects the resilience of a sector leader, boosted further by its acquisition of Redrow which has added greater scale and the potential for meaningful synergies as the integration progresses.

“However, a 7.8% drop in total home completions highlights how the long-anticipated rebound in housebuilding has yet to take hold and drive growth in the sector.

“Indeed, the drag from weak consumer confidence, elevated mortgage rates, and a lack of meaningful government intervention continues to limit what otherwise capable operators can deliver.

“Barratt clearly has strong fundamentals in place, but like the rest of the sector, it is constrained by forces beyond its control.”