More than eight years on from the tragic Grenfell fire that claimed 72 lives, the U.K.’s home builders are still grappling with the long fall out from clearing up years of unsafe building practices.
Taylor Wimpey Plc has set aside £222 million ($297 million) to deal with the costs of repairing unsafe buildings, almost double its previous provision, according to a statement Wednesday. Coupled with a one off hit from a defective London project and a settlement relating to affording housing with the U.K.’s competition watchdog, the provisions pushed the company to a £92 million loss in the first half of the year, reversing a £98 million profit a year earlier.
The company’s shares fell as much as 6.25% in early London trading, the most in almost nine months. That’s despite Taylor Wimpey maintaining its guidance and delivering sales that were broadly in line with analyst estimates.
“Taylor Wimpey’s surging fire-safety charges, with an additional £222 million of provisions booked in the first half, highlight the risk of further, potentially significant costs as serious faults continue to emerge that previous assessments missed,” Bloomberg Intelligence senior real estate analyst Iwona Hovenko wrote in a note Wednesday.
The Grenfell fire exposed widespread failure in Britain’s building safety regime, with a public inquiry into the tragedy finding fault in almost every area it examined, from the designers, contractors and suppliers, to the building’s managers and the fire service. The cost of cleaning up years of shoddy practices has fallen mostly on the country’s home builders who have faced a series of levies and charges. That’s provoked widespread provisioning and a series of profit warnings as issues have gradually emerged.
“Taylor Wimpey’s first half results make for tough reading for investors,” Quilter Cheviot head of property research Oli Creasey wrote in a note Wednesday. “It remains unclear whether peer firms will also need to raise provisions or if this issue is stock-specific.”
The latest provisions come as the country’s homebuilders’ hopes of a rapid recovery from the interest rate shock of 2022 look increasingly optimistic. While Taylor Wimpey maintained its guidance for home completions, the company reported average selling prices that dipped slightly from a year earlier while the number of homes in its total order book also fell.
The housebuilder downgraded its expectation on group operating profit to about £424 million, despite saying in April it expected it to be £444 million, citing a one-off charge relating to a historic project in London that had significant defects. Group operating profit was £161 million in the six months ended June 29, down from £182.3 million a year earlier.
“The delays in interest rate reduction, some customer sentiment issues currently around the wider macroeconomic environment — they are all playing into the market that we’re seeing at the moment,” Chief Executive Officer Jennie Daly said in a telephone interview.
In a separate statement London real estate broker Foxtons Group Plc warned home sales had been quieter than expected as interest rates had not come down as quickly as it previously forecast, while weak consumer confidence weighed on demand.
“We expect a more challenging second half for the sales market compared to the first,” Chief Executive Officer Guy Gittins said.
The company reported pre-tax profits that were up 35% to £10.2 million for the six months through June driven by a 25% jump in revenue from home sales despite the weaker backdrop, according to a statement Wednesday.
Foxtons fell as much as 5.47% following the statement, the most in almost four months.
Top photo: A Taylor Wimpey Plc residential housing construction site.
Copyright 2025 Bloomberg.
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