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Crest Nicholson has said it hopes to settle a claim brought by M&G over a 2021 fire that badly damaged a block of flats built by the housebuilder and owned by the UK asset management group, to avoid a lengthy legal fight.
The FTSE 250 developer last week announced it had set aside £13mn after receiving a legal claim over the incident, but did not name M&G as the claimant.
The fire broke out at a low-rise apartment complex outside Reading in April 2021, with news reports at the time describing a blaze sweeping across the roof and upper level of the building.
Crest Nicholson on Tuesday said it had received a letter of claim alleging “fire safety defects and claiming compensation for the rebuild and other associated costs”. The company separately confirmed the claim was filed by M&G. M&G Real Estate declined to comment on Tuesday.
Crest Nicholson chief executive Peter Truscott said the company would “always seek to find a settlement if one is available on sensible terms, compared to a long legal process”.
He said the building at Arborfield Green was “a one-off, bespoke development”, meaning the group did not expect similar claims at any of its other former sites.
Fire safety in UK residential buildings has been under intense scrutiny since 72 people died in the fire at Grenfell Tower in London in 2017. Crest Nicholson’s provision for the legal claim is separate from the £144.8mn it has set aside for other fire safety remediation works. Dozens of major builders have commitment remediation funds under agreements with the government.
Crest Nicholson and M&G announced the partnership to build Arborfield Green in 2018, with the asset manager providing funding for more than 100 new private rental homes. Crest Nicholson said the legal claim was “ongoing” and that the timeline and “ultimate route to settlement” were not clear. The housebuilder added that the £13mn set aside was its “best estimate” of its “potential exposure” resulting from the claim, having taken legal advice.
The bill adds to a challenging year for the Surrey-based housebuilder, which on Tuesday reported a 70 per cent annual decline in adjusted pre-tax profits to £41.4mn.
It comes after housebuilders across the sector have suffered a painful slowdown in sales as higher interest rates have strained buyers’ budgets. Crest Nicholson reported that the number of homes it completed fell 26 per cent year on year to 2,020 in the 12 months to the end of October.
However, Truscott said “we are starting to see the early signs of improvement in 2024” with inquiries from potential buyers rising. “I think people understand that it is now unlikely that there will be a significant [house] price correction,” he added.
The company also announced on Tuesday that Truscott would retire this year after almost five years as chief executive. He will be succeeded by Martyn Clark, currently chief commercial officer of larger rival Persimmon.
