Britain’s major housebuilders have raked in billions of pounds in profits since the Grenfell Tower fire – and handed vast sums to their bosses.
As debate rages about who should pay to remove unsafe cladding from buildings, analysis by the Mail shows the eight biggest listed housing developers have made £21billion since the deadly inferno in 2017 and can well afford to make restitution.
The profit bonanza has prompted firms to hand their chief executives a total of £202million since 2017.
The revelations come after Housing Secretary Michael Gove this week said he was prepared to take ‘all steps necessary’ to force the industry to contribute towards a £4billion fund to cover the cost of safety works.
He said the Government would restrict access to funding to force developers to pay up, as well as bringing in new laws or pursuing them through the courts.
The Grenfell disaster claimed 72 lives when a tower block in west London caught fire in June 2017. It was the deadliest UK structural blaze since 1988.
An inquiry found that the cladding on the building’s exterior did not comply with regulations and was the key reason behind the fire’s spread, sparking a rush to remove similar cladding from buildings across the country.
The crisis has trapped many homeowners in dangerous properties they cannot sell as banks will not let would-be buyers take out mortgages due to the safety hazard.
But property firms have continued to generate bumper profits despite pressure for them to pay at least part of the huge repair bill.
Since 2017 the eight FTSE 350 builders have amassed profits of just over £21billion, our analysis shows. Persimmon, the largest London-listed housebuilder by market cap, raked in nearly £4.9billion.
Barratt Developments amassed profits of £3.9billion, and Berkeley Group £3.4billion. All three have developed properties found to have been covered in unsafe cladding, presenting a fire risk.
Bosses have also earned handsome sums, with Persimmon attracting attention for £86million it has doled out.
A hefty chunk of this was the £82million bonus paid to former boss Jeff Fairburn in 2017 and 2018 – a package that drew outrage from politicians, corporate governance experts and charities, and ultimately led to his ousting from the company.
Berkeley chief executive Rob Perrins was paid nearly £60million.
Barratt and Taylor Wimpey paid out £14.9million and £11.3million to their bosses respectively.
The builders are now being asked to fund cladding removal, having already set aside £1billion to fix existing buildings, while another £2billion is expected to be raised from a cladding tax that comes into force in April.
However, many in the industry have criticised the Government focus on housebuilders, arguing that the makers of the cladding should also pay up.
Others have said their cash will be used to repair properties they were not responsible for building, such as those where the developer has gone bust.
While the figure demanded by the Government is eye-wateringly high, it pales in comparison to the bumper profits hauled in by major builders, which has left many swimming in cash.
The profit boom has been fuelled by the ever-rising price of houses. The Help to Buy scheme has also been a boon for builders, but has been criticised for funnelling money into the pockets of developers and failing to stop first-time buyers from being priced out of the market.
A House of Lords report on Monday said the scheme, which will have cost £29billion when it ends next year, did not provide ‘good value for money’ for taxpayers, inflating house prices.
It said the money would have been better spent on building more homes. Several firms continued to rake in money despite a series of scandals in addition to the cladding controversy.
In 2019, a review found some of Persimmon homes had exposed residents to an ‘intolerable’ fire risk due to poor build quality.
And last month, Taylor Wimpey agreed to scrap leasehold contracts that would double homeowner ground rents every ten years.
House price growth accelerated during the pandemic as buyers, encouraged by a stamp duty holiday and low interest rates, stormed into the market, seeking bigger homes.
The frenzy pushed the average cost of a UK home to a record £254,822 in December, according to data from Nationwide.
While the firms have grappled with rising costs of building materials caused by supply chain disruption, this has been more than offset by the escalating cost of British homes.
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