Crest Nicholson to fork out up to £15m on more build defects

(Sharecast News) - Crest Nicholson said on Tuesday that it has become aware of build defects on four sites that were completed prior to 2019 that could cost it up to £15m to fix. In an update on trading for the period from 1 November 2023 to 15 March 2024, the housebuilder said remediation on the four sites will take place over the next three years.

"As a result, the board has decided to appoint third party consultants to provide greater assurance on the adequacy of current provisions around these and other sites completed prior to 2019," it said. "A further update will be provided at the group's interim results in June."

As far as trading is concerned, Crest said it has achieved reservations in line with expectations and delivered a year-to-date open market sales per outlet per week (SPOW) rate of 0.44, based on 46 outlets, with reduced activity before Christmas and a stronger performance from mid-January.

The SPOW rate for the last eight weeks to 15 March improved to 0.52, it said, while sale prices have been in line with expectations and cancellations remained at normalised levels.

Crest Nicholson said build activity in the sector continued to operate at a lower level, which is now resulting in lower labour costs in some areas. Overall build cost inflation has largely stabilised and at a level lower than prior year.

The housebuilder said the planning system continues to be "challenging". "Our strong land portfolio with several quality sites acquired last year places us in a favourable position to mitigate planning delays and support future outlet growth," it said.

It added that construction at the Farnham development and other legacy sites which are still being completed is progressing "largely as planned".

"The group continues to focus on optimising value and expects FY24 completions to be in the range of 1,800 to 2,000 homes, with completions weighted approximately 35/65% in favour of the second half of the year, reflecting the opening order book and the low level of reservations in the first two months of the financial year," it said.

"Sales prices are expected to remain stable in FY24."

At 0810 GMT, the shares were down 3.9% at 215.20p.