Barratt Redrow has recovered £38m from subcontractors in connection with defects on legacy developments, helping to offset rising building safety costs as the housebuilder prepares to increase remediation spending to £300m during the current financial year.
In its year-end trading update, the UK’s largest housebuilder said it had taken an additional net legacy property provision charge of around £95m, together with a further £13m of charges relating to joint ventures, reflecting the continuing financial impact of historic building issues.
The additional costs were partially offset by the £38m recovered from subcontractors responsible for defects on legacy schemes. However, Barratt Redrow also incurred £14m in legal costs while pursuing third-party recovery claims.
The company expects cash expenditure on building safety remediation to increase significantly after regulatory approvals and construction delays slowed progress on remediation programmes during the previous financial year.
Spending on legacy property work totalled approximately £155m over the past 12 months, around £100m below earlier expectations. Barratt Redrow now forecasts this expenditure will increase to £300m during the current financial year before rising further to around £450m in 2027/28.
Despite these ongoing liabilities, the company said its balance sheet remains sufficiently robust to support a substantial return of capital to shareholders.
Barratt Redrow will replace its ordinary dividend with a share buyback programme, returning approximately £400m to investors through buybacks launched today, alongside a nominal dividend of 1p per share.
The housebuilder said adjusted profit before tax for the year ended 28 June is expected to be in line with market expectations after completing 17,667 homes. It also finished the financial year with net cash of around £772m.
For the 2026/27 financial year, Barratt Redrow expects to complete between 17,700 and 18,200 homes from an average of around 415 sales outlets. The company also anticipates build cost inflation of between 3% and 4% over the year.
