Housebuilder Vistry has blamed second staircase regulations and extended liability for building safety for an increase in its fire safety remediation provisions.
The housebuilder said it received 41 new claims from building owners over the course of 2024, which prompted a £117.1m increase in provisions.
In its accounts for the year to 31 December 2024, published this morning (26 March), the London Stock Exchange-listed firm said: “The regulatory changes have broadened the types of issues which are deemed to cause a risk to occupant safety, as well as increasing the historical period for which the developer is responsible.”
Vistry’s provisions for building safety work now stand at £324.4m after it spent £68.8m on remediation works in 2024. It said it completed work on 28 buildings last year, and work was ongoing or yet to begin on 240. It also said that responsibility for 10 buildings “was transferred to a joint venture”.
In 2024, the government introduced a requirement for second staircases on all high rises built from 2026. This has forced housebuilders to redesign some schemes.
Vistry said it had identified a further £16.8m it expects to spend redesigning projects, on top of the £18.5m identified in its 2023 accounts.
“[The increase is] due to viability challenges on schemes which are now required to incorporate second staircases in high-rise buildings, leading to increased costs and a loss of saleable floorspace,” the firm said in its Stock Exchange announcement.
Liability for building safety defects was also extended from six to 30 years under the Building Safety Act 2022.
Higher demand for specialists and subcontractors has also driven up prices in the safety remediation market, which Vistry said had “add[ed] to the general upward inflationary pressure”.
Vistry recovered £27.2m in remediation costs from the supply chain over the course of 2024.
Elsewhere in its financial announcement, Vistry reported an increase in turnover from £4bn to £4.2bn.
But the housebuilder said it missed its target for adjusted pre-tax profit, after it warned in November that “understated costs” would push down its bottom line for the next three years.
At the time, it predicted that it would make an adjusted profit of £300m in 2024, but instead it made £263.5m, down from £407.3m in the prior year.
Vistry said that was “significantly below our expectations” at the beginning of 2024, adding that it had “underperformed financially”.
Vistry blamed a £91.5m hit to its profit on “insufficient management capability, non-compliant commercial forecasting processes and poor divisional culture” for the cost forecasting problems, after it carried out internal investigations and review processes into its South division.
The group’s forward order book decreased from £4.6bn to £4.4bn but chief executive Greg Fitzgerald said he expected his firm to “deliver improved cash generation and reduce net debt” in 2025.