Taylor Wimpey unveils £125m cladding fund as dividend returns

Tom Belger
·Finance and policy reporter
·3 min read
Construction workers work on a Taylor Wimpey housing estate in Aylesbury, England. Photo: Eddie Keogh/Reuters
Construction workers work on a Taylor Wimpey housing estate in Aylesbury, England. Photo: Eddie Keogh/Reuters

Taylor Wimpey has announced it will resume paying dividends and set aside £125m ($173m) for post-Grenfell cladding and other fire safety work on its apartment blocks.

The leading UK housebuilder (TW.L) leapt more than 2.5% on the stock market in London on Tuesday, as investors welcomed its full-year results for 2020.

It comes in spite of plummeting full-year completions, revenues and profits, with the company shutting down sites and then initially reopening at lower capacity when the coronavirus first struck last year.

Taylor Wimpey finished 9,799 new homes last year, down from more than 16,000 the previous year. Revenues were down 35.7% to £2.79bn, and profits down 64.7% to £300.3m.

The company also said it would set aside £125m to "support fire safety improvement works for leaseholders." It said the measures would ensure its apartment buildings of all heights met new property industry guidance on safe construction materials, introduced in the wake of the Grenfell Tower disaster. Flammable cladding panels helped the fire spread at the London tower block, with 72 people losing their lives.

READ MORE: UK house price growth rebounds in February hitting highest average prices on record

Taylor Wimpey noted many leaseholders not just in high-rises had "been left with unreasonably large bills to ensure their properties are safe" as government rules and advice has changed.

The new funding is only for properties built in the past two decades, but covers blocks below 18 meters as well as above, and covers multiple forms of cladding.

It said it would fund and oversee works on properties it still owns to make them safe and mortgageable, and would "contribute" to freeholder-led works on buildings it no longer owns that are ineligible for government funding.

It had previously put aside £40m for the cost of removal and replacement of aluminium composite material (ACM) cladding, the kind used at Grenfell.

It comes after rival developer Persimmon also vowed last month to put aside £75m to fix potentially unsafe cladding on buildings it constructed. The housebuilder announced that cladding on 26 blocks it built may need to be removed.

Meanwhile Taylor Wimpey will also pay around £151m in dividends at 4.14p a share, after cancelling its 2019 dividend to conserve cash last year.

The payout reflects the strength of demand in Britain's housing market, fuelled by lifestyle changes in the wake of COVID-19 lockdowns and tax cuts on property transactions. New data from mortgage lender Nationwide on Tuesday showed average transaction prices hitting a record high, reaching £231,061. Prices rose 0.7% month-to-month.

READ MORE: Homeowners call for stamp duty to be scrapped

The updates come after reports over the weekend the government could extend a stamp duty holiday in England and Northern Ireland had sent housebuilding stocks rallying on Monday.

The chancellor Rishi Sunak is said to be considering extending the tax cuts by four months, with buyers escaping the levy on the value of property up to £500,000.

But Taylor Wimpey said its order booked was larger and more valuable than a year earlier even ahead of any extension, despite the holiday being due to expire from April.

"The 2021 selling season has started well, following on from the stronger than expected recovery of the housing market in the second half of 2020 and reflecting the underlying strength of demand, underpinned by low interest rates and stable mortgage lending," said the company.

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