Housebuilder Vistry has said it expects a raft of “cost issues” to hit its profit to the tune of £165m, while Crest Nicholson and Persimmon have been affected by remediation provisions.
Vistry said in a trading update published on Wednesday (15 January) that it had carried out an “independent and internal review process” after it became aware of cost issues in its South division last October.
It now expects those issues to hit its adjusted profit before tax by £165m. The bulk of that impact will be a £105m hit in the year to 31 December 2024, plus an expected cost of £50m in 2025 and £10m beyond 2025.
The housebuilder confirmed that it did not find similar systemic issues outside of its South division. It has implemented “control enhancements” to mitigate against similar problems, such as a tightening of the procedures for the monthly site cost reviews.
Vistry expects to table an adjusted profit before tax of around £250m in the year to December 2024, down from £419.1m the year before, following delays to a few partners agreements and a decision not to push forward with some land transactions that had become “unattractive”.
It also said that the open housing market was constrained in 2024, mainly due to “mortgage affordability”.
Vistry is one of several housebuilders that issued updates this week.
Crest Nicholson announced that soaring fire safety provisions had forced to delay the publication of its accounts until 4 February.
Crest Nicholson expects to have spent £245m on fire safety remediation by the end of the year to 30 October 2024 – an increase of between £120m and £130m on its estimate at the year’s halfway point.
In an update announcing the delayed publication, the firm said it had made “significant progress” in assessing its building stock for fire safety issues, and “is nearing completion of its assessment of all buildings within the scope of the Self Remediation Terms”.
“[We are] therefore now in a position to account for the expected costs for all 291 buildings [in need of remediation],” it added.
But it said that will not include any recoveries from third parties that could offset those costs.
Crest Nicholson expects to complete its remediation programme in the year to 30 October 2029, which would meet the government target set in December of remediating all high rises of dangerous cladding by the end of 2029.
The firm still expects to reach an adjusted profit before tax towards the lower end of its projection, of between £22m and £29m.
Persimmon also announced it had spent £60m remediating its unsafe buildings in the year to 31 December 2024. That makes up half of its total spend on remediation, it said in a trading update published on Tuesday (14 January).
It said it had either completed or started remediation on more than 70 per cent of its known developments that need remediation work.
The firm added that it expects to reach an underlying profit before tax around the upper end of its market expectations, of between £349m and £390m.
“However, we are mindful of evolving macroeconomic and geopolitical uncertainties, including the timing of future interest rate changes, and the effect that they may have on our market and consumer confidence in the short-term,” it added.
Vistry and Persimmon are two of seven housebuilders currently under investigation by the Competition and Markets Authority (CMA) for potential market collusion.
Earlier this month, the CMA said it was extending by five months its investigation into whether the firms “may have exchanged competitively sensitive information”.
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Joshua Stein