Barratt’s £15.8m bill at Citiscape … and £70m bill for all cladding sites

UPDATE: 2 July 2021: Barratt buys back Citiscape

Barratts buy back Citiscape’s 95 cladding-blighted flats

Citiscape, the Barratts-built residential tower block on Drummond Road and Frith Road in Old Town, has become the first in Britain to be bought back by its builders in order to resolve issues around the building’s dangerous Grenfell-like aluminium composite material cladding. But despite leaseholder organisations saying that developers have “a moral duty” to consider…

Barratt has announced today that it has spent £15.8 million to remove cladding from the Citiscape site in Croydon, south London, and will spend a total of “around” £70 million on this and other sites.

The figures put pressure on other housebuilders to make public the costs of their cladding remediation – which in many cases they were happy to dump on leaseholders until the public furore.

When the property tribunal ruled that the 95 leaseholders at Citiscape were responsible for the cladding costs they were estimated at £2-£2.5 million, or around £25,000 per flat.

If the total is now £15.8 million – it could rise higher – the property tribunal would have dumped leaseholders with a bill of £161,000 per flat.

It is clear that problems at Citiscape, which has been evacuated, extend well beyond simply cladding removal and there now appear to be issues with the foundations.

Barratt’s cladding removal reveals new problems in Croydon

Design issues at a Barratt Developments site in south London and problems at other locations have presented the housebuilder with remediation costs of about £70 million and have forced it to offer an apology.

Leaseholders at the site – where LKP became involved in 2017 – have been told that works may take four years.

It is an open question whether it might be cheaper simply to knock down Citiscape and start again.

LKP has paid tribute to Barratt for its social responsibility to step in and repair Citiscape, which was completed in 2003 and long out of warranty.

The Barratt statement today seeks to distance itself from the errors at Citiscape: “This is a non-standard development which was designed for us in 2001 by a third-party structural engineering firm and was sold to the current freeholders in 2003.”

The freeholder at the site is Vincent Tchenguiz via Proxima GR and FirstPort, the country’s largest property manager which the property tycoon used to own, is embedded as the property manager via a controversial tripartite lease arrangement. This means it manages Citiscape for the duration of the lease.

It was FirstPort which took the matter to the property tribunal so that the cladding remediation bill did not fall on them.

LKP found a barrister for the leaseholders, who may have been spared FirstPort’s legal costs.

FirstPort told LKP today:

“We have been working closely with all parties involved in the building to support residents and keep them updated of progress.

“We understand this is a very difficult situation for residents and thank them for their patience and understanding.”

Barratt’s openness over Citiscape is of importance to the wider discussion over cladding remediation as LKP has urged a risk-based assessment of fire-safety rather than one based just on cladding type.

In this, we echo the views of the Berkeley Group, which is dealing with all Grenfell ACM cladding issues at its sites without recourse to public money.

At last, some sense over the cladding crisis from … Rob Perrins, of the Berkeley Group

The full statement from Barratt regarding Citiscape is here:

In 2017, following the tragedy at Grenfell, we carried out a review of all buildings where cladding had been used. As part of this review, we voluntarily undertook to pay for work to remove and replace Aluminium Composite Material (‘ACM’) cladding on the Citiscape development in Croydon. This is a non-standard development which was designed for us in 2001 by a third-party structural engineering firm and was sold to the current freeholders in 2003. When the ACM cladding was removed from Citiscape in 2019, structural concerns were identified and we appointed independent structural engineers to undertake a full investigation of the building. These investigations have identified significant issues relating to the design of the building’s reinforced concrete frame (‘RCF’) requiring extensive remedial work. While we have no legal liability to cover the costs of this work, in line with our commitment to customers and recognising the responsibility we have for the work of our partners, we have taken the decision to pay for the required remedial action which would otherwise fall on leaseholders.

As a responsible developer, we appointed independent structural engineers to review all of the other developments where RCFs were designed for us by either the same original engineering firm or by other companies within the group of companies which has since acquired it. The preliminary reviews of all 26 of these developments, the majority of which were designed over ten years ago, are complete and have not identified any issues as severe as those present at Citiscape. Engineers are now undertaking more detailed reviews to see if any remediation of the concrete frames is required.

Those detailed reviews have so far shown that eight developments have no defects while seven developments required some remedial action to address smaller-scale problems. At these developments, remedial action has either been successfully completed or is underway. We apologise unreservedly to affected customers that the standards that we set for ourselves and our partners were not met at these developments.

While in most cases we have no legal liability, in line with our commitment to put our customers first we will ensure that no costs associated with remedial works are borne by leaseholders. As previously disclosed, up to 31 December 2019, we had incurred £15.8m on Citiscape for both the costs of removing the ACM cladding and other voluntary assistance including the costs of providing alternative accommodation for residents.

Based on our current assessments, it is estimated that the total future costs for the required remedial programme at Citiscape, the review itself, and any remediation required at other buildings, will be around £70m, with this charge, and the related cash outflow arising in FY20 and FY21. We are actively seeking to recover costs from third parties, however there is no certainty regarding the extent of any financial recovery.