Taylor Wimpey swings to loss as cladding bill doubles

Times

30-07-2025

Taylor Wimpey is facing a new multi-million pound bill to fix fire safety issues at some of its older blocks of flats.
The developer, one of the biggest in Britain, expects its remediation works to cost £222.2 million more than it had originally expected, almost doubling its cladding bill, which stands at £555 million. Even that is just a 'best estimate'. Bosses had hoped to have all the remediation works completed by 2028, but now accept that the repair programme will continue until 2030.
Most of the extra costs that the FTSE 100 group is facing relate to defects with cavity barriers hidden behind walls and ceilings which prevent the spread of fire and smoke. These issues 'were not visible in earlier non-intrusive assessments' and so have only been picked up in recent months after the brickwork and render was removed.
'When we did our first assessments, the priority was around cladding that was combustible, and of course brick and block and render isn't combustible,' Jennie Daly, the chief executive, said. 'Now we're going into those buildings doing intrusive [inspections], we're finding these [additional] defects.'
Taylor Wimpey said that the fire engineers who sign off on buildings were 'becoming more cautious'. At a number of buildings that inspectors had previously said were fine, they have now decided that they do require some remediation work after all. 'There's a lot more risk aversion,' Daly, 55, added.
• Is now a good time to take home some Taylor Wimpey shares?
As a consequence of the extra costs, Taylor Wimpey swung to a pre-tax loss of £92.1 million in the six months to the end of June, having turned a profit of £99.7 million in the same period of 2024. The interim dividend, to be paid on November 14, was reduced by 3 per cent to 4.67 per share.
Even after excluding the new cladding costs, underlying pre-tax profits fell by a fifth to £148.1 million from £187.7 million in the first half of 2024. Taylor Wimpey's profitability was hampered by having to pay £20 million to fix 'defective workmanship' at one of its old London developments. The contractor responsible had originally agreed to carry out the repair works but has run into 'financial difficulties', leaving Taylor Wimpey to foot the bill.
That means this year's annual profit is expected to come in at £424 million — 5 per cent below what management had been aiming for.
Given the increased cladding costs and reduced profit expectation for 2025, Taylor Wimpey shares fell as much as 7 per cent on Wednesday morning. At midday, they were 5¼p, or 5 per cent, down at 101¾p.
Created through the merger of Taylor Woodrow and George Wimpey in 2007,Taylor Wimpey is one of the biggest housebuilders in Britain and is listed on the FTSE 100 with a stock market value of close to £4 billion.
Between January and June it built 5,264 homes — 11 per cent more than the 4,728 homes it delivered in the first half of 2024, reflecting improved demand from would-be homebuyers in the opening few months of the year.
However, trading over the all-important spring selling season was 'softer' and that has persisted over summer. Reflecting that, Taylor Wimpey is selling fewer homes each week than it was this time last year, although it still expects to deliver between 10,400 and 10,800 homes across 2025 as a whole.
'The first quarter was a really good quarter, but there was definitely a sentiment shift in the second quarter,' Daly said. 'Customers are just being a lot more cautious. Whether that's a concern about tax [rises] in the autumn or feeling that their jobs are maybe a little bit less certain than they were; tariffs and other issues or even waiting for another rate cut. There's a variety of things, but it's all coming together to give the sense of hesitancy and caution.'
Pricing is 'broadly flat', Taylor Wimpey said. Its average selling price of £313,000 is 1.3 per cent below last summer, but that is mostly down to the size and location of the houses it has sold so far this year, rather than underlying price deflation.
There remains a north-south divide in terms of pricing, with Taylor Wimpey able to push prices slightly harder in the north, where houses are generally cheaper. By contrast, affordability remains a problem in the south of England.
'I have a real concern for first-time buyers, particularly in the south,' Daly said. 'Mortgages [for first-time buyers] are available but they're more expensive so that tests affordability, then you've got to build your deposit and now you've got [extra] stamp duty costs. There's quite a lot going on for first-time buyers, who are fundamental to the health of the housing market.'