As the financial hardship of many leaseholders continues, building firms are cashing in on a property market boom.
The five biggest developers have made around £10billion in profits since the Grenfell Tower inferno, allowing them to shower more than £4.5billion on shareholders in dividends.
The Government’s Help to Buy scheme, which offers loans to first-time buyers, has played a key part – £13billion has been doled out but developers are the real winners, as a Mail audit of the five biggest shows.
The five biggest developers have made around £10bn in profits since Grenfell Tower inferno
Barratt Developments
David Thomas, Chief executive of Barratt Developments
Value of company: £7bn
Pre-tax profits since Grenfell: £2.2bn
Dividends since Grenfell: £1.26bn
Help to Buy revenue: £1.84bn/year (approx)
Cladding removal fund: £82m
The first housebuilder to back calls for a developer levy, it has already spent £82million for remedial action on cladding and other defects.
Without a comprehensive list of the housing blocks at risk, it is impossible to say how far the money will go.
Profits for the second half of last year alone hit £430million. Around 44 per cent of its sales for that period were boosted by the Help to Buy scheme.
Chief executive David Thomas has been paid £14million in the past five years, peaking in 2019 at £3.7million.
Mr Thomas lives in a sprawling estate in Purley, south London. Bought for just under £2.6million in 2008, it is now worth around £4.5million.
Persimmon
Dean Finch, chief executive of Persimmon
Value of company: £8.82bn
Profits since Grenfell: £2.1bn
Dividends since Grenfell: £1.48bn
Help to Buy: £1.9bn/year (approx)
Cladding removal fund: £75m
Persimmon pledged £75million yesterday to pay for work on 26 buildings that may be affected by the cladding issue. Of these, nine are high rises over 18 metres.
The company, which has been synonymous with excess in the building industry, has embarked on a drive to improve its reputation. Its profits are boosted thanks to Help to Buy. The scheme accounted for about 60 per cent of its sales in 2018 and helped it to almost triple its profits per house to £66,265.
In the year after Grenfell, Persimmon became the first British housebuilder to make annual profits of more than £1billion and paid then chief executive Jeff Fairburn £85million over two years.
Last year it appointed Dean Finch, who previously turned around National Express, as its new chief executive. It has started the year with a record order book. Analysts predict that it will have made £847million in profits in 2020 despite the coronavirus.
Pete Redfern, chief executive of Taylor Wimpey
Taylor Wimpey
Value of company: £5.94bn
Pre-tax profits since Grenfell: £1.65bn
Dividends since Grenfell: £1.1bn
Help to Buy revenue: £1.7bn/year (approx)
Cladding removal fund: £40m
The fortunes of building boss Pete Redfern stand in stark contrast to the desperate straits of many flat-owners.
Taylor Wimpey’s long-standing chief executive has been paid £40million in ten years – the same sum the firm has earmarked to replace cladding.
Mr Redfern lives in an Oxford mansion bought for £4.75million in 2016 and has a portfolio of Taylor Wimpey properties in the UK and Spain, mostly purchased through a staff discount scheme. In 2019, he backed down from plans to take advantage of a £436,000 discount on a £2.48million riverside apartment in central London.
Jason Honeyman, Chief Executive of Bellway
Bellway
Value of company: £3.7bn
Pre-tax profits since Grenfell: £1.5bn
Dividends since Grenfell: £465m
Help to Buy revenue: £772m/year (approx)
Cladding removal fund: £86.8m
Bellway has seen revenues soar by 12 per cent to £1.7billion in the past six months and completed a record 5,656 homes, up 6.3 per cent on a year ago. It has set aside £86.8million to make fire safety improvements to its homes.
Chief executive Jason Honeyman earns £1.09million and lives in a mansion in Chislehurst, south-east London, bought for £2.9million in 2016.
Bellway cancelled a dividend to shareholders during the first lockdown, only to reinstate it in October.
Rob Perrins, Chief executive of Berkeley Group
Berkeley Group
Value of company: £5.29bn
Pre-tax profits since Grenfell: £2.3bn
Dividends since Grenfell: £349.5m
Help to Buy revenue: £196m/year (approx)
Cladding removal fund: Unknown
The luxury developer has made huge profits in recent years and has been criticised over executive pay, facing a shareholder rebellion two years ago.
Chief executive Rob Perrins lives in a sprawling £4million six-bedroom period property in Woking, Surrey.
Berkeley has been praised by some campaigners post-Grenfell for doing work on a number of its developments without waiting for government intervention. However it has repeatedly declined to reveal what it is offering and how many flats have defects.
Controversially, Mr Perrins last year said that the Government should relax a blanket ban on combustible cladding and adopt a risk-based approach.
Who gets help… and who’s been left in the cold
What’s been announced?
Housing Secretary Robert Jenrick yesterday announced an extra £3.5billion from Government to replace dangerous cladding from high-rise buildings.
It takes the total pot to £5billion. Those in low and medium-rise blocks will pay a maximum of £50 a month for ‘long-term, low-interest’ loan to help them replace their cladding.
Who does it help?
Mr Jenrick said leaseholders in high-rise buildings – 18 metres (six storeys) and above – won’t pay to replace dangerous cladding.
It may relieve 700,000 people of average bills of £25,000 each.
Who misses out?
Leaseholders in low and medium-rise blocks say their repayments, which could cost £600 a year, are unaffordable with other bills such as 24-hour fire patrols (around £499 a month per flat) and insurance hikes (around £1,307 a year).
Estimates say more than 2million live in unsafe buildings below 18 metres. Critics say the size of the debt, which could be up to £24,000, will be deducted from the value of homes when leaseholders try to sell, pushing many into negative equity.
Is this just about cladding?
Hundreds of apartment blocks in England and Wales have other safety defects such as combustible insulation and timber balconies.
Mr Jenrick ducked questions on payment for these repairs, which often cost more than replacing cladding.
Leaseholders in unsafe buildings of all heights are still liable for tens of thousands of pounds to make their homes safe.
Why does height matter?
Mr Jenrick said the Government was focusing on high-risk buildings and that cladding on low and medium-rise buildings would often not need replacing.
But since Grenfell, two major fires have occurred in buildings below 18 metres. Campaigners say it is unfair for leaseholders to pay up to £600 a year to fix defects because they live in low or medium rise blocks.
Will it speed up repairs?
Extra Government funding should allow more work to get under way. But this will be limited to high-rise buildings and the pot only covers cladding issues.
Just 216 out of a possible 11,760 dangerous buildings have been fixed since Grenfell.
Does it help with the housing market?
About 1.27million properties are unsellable due to rules introduced after Grenfell. An EWS1 certificate is required to prove a building is safe before lenders will offer a mortgage.
Mr Jenrick said the measures allow homeowners to buy and sell once again – but it is unclear how. An industry consultation launched last month could free 600,000 homes from the process.
Will the industry pay its dues?
A planned developer tax could raise £2billion over a decade. There will also be a levy on some high-rise projects, but it is unknown how much this may raise.
Critics say construction giants can and should pay more to cover the costs of the scandal, while building owners, manufacturers and insurers should not get off scot-free.