Bellway, another household-name developer, is back in the frame. Last week it revealed it needed to spend an extra £14.1m to put right defects at a building it had built in south London. This isn’t the first time Bellway has had to call into its account to pay for this project—13 years ago, a block of apartments was built in Greenwich, and it already cost the company £31 million to rectify defects in the reinforced concrete frame.

So what went wrong?
A Costly Cure for a 13-Year-Old Problem
The exterior of the building at Greenwich was supposed to look great, but behind closed doors, the building had some real structural problems. The frame-whole structure is framed by a reinforced concrete frame-had to be renovated. Further inspection revealed the renovation was going to cost much more money than originally estimated-on approximately £14.1 million more.

According to Bellway, added cost was based on thinking through in terms of how they could actually correct the building. It initially thought they’d just be able to patch up the problem quickly. After examination and some detailed modeling, they were shocked to find that the fix was going to be more complicated-and more expensive.

Recover Costs
Bellway is now trying to recover part of the money. They see the problems with the concrete frame aren’t their issue in their entirety. Other firms designed and built the building. So, they are also suing those firms, too, hoping their insurers will cover their fair share of what is owed. Easy to say, of course. The process isn’t easy, and for now, Bellway can’t count on any of that money coming back.

To ensure that this defect isn’t hiding in other buildings, Bellway has inspected the rest of its developments where the same companies were engaged. Thankfully, they haven’t found similar defects with any of the other buildings it has built.

The Big Picture: Bellway’s Continuing Issues
This newest blow is but the latest in a series of ills that have befallen Bellway in recent years. Since 2017, it has shelled out an astonishing £655 million to put right problems in older buildings. It is not a matter of minor fixes, either; 137 buildings have required major repairs. Some are still ongoing, while others are at long last complete.

Things became worse for Bellway when it tried to acquire another large housing firm, Crest Nicholson, but the offer failed. That loss cost Bellway another £5.4 million more.

Bellway Profits Affected
As you can probably guess, all these difficulties have had a huge impact on the financial performance of Bellway. According to the company’s latest financial reports, its pre-tax profits have fallen to new depths. For last year, the company made £483 million as pre-tax profit. This year, it managed to make a minimal amount of £183.7 million in terms of that particular profit.

Much has gone down with the company’s turnover as well. The revenue at Bellway is £3.4 billion for the year 2023. This year the revenue slumped to £2.38 billion. One of the primary reasons is that the house completions by Bellway were not as many as those in the previous year. In the year 2023, Bellway completed 10,945 homes. Only 7,654 were completed this year.

Silver Lining for 2025
Its CEO, Jason Honeyman, is still optimistic about the future although its past year has been by no means easy. “I can point to some positive signs, especially in the last six months of the year,” he said.
The company has been struggling with a low order book this year, meaning that there were fewer houses at some stages in the pipeline. However, from the second half of the year things began to pick up. Honeyman attributes the increase to falling mortgage interest rates. Lower rates have made it cheaper for people to afford homes, which has boosted the demand for new houses. It led to an increase in the number of people reserving homes in the latter part of the year, Bellway reports.

Honeyman also mentioned the force of outlet opening programme by Bellway. The company has made very earnest efforts to open a larger number of sales outlets that have helped augment the inflows into order book. Such factors at the end of the year left the order book looking much healthier than it did at the beginning.

Looking forward to 2025, Honeyman believes that the company will see more homes completed. Although this year has been tough, the company is looking well-positioned to bounce back and look forward to delivering more homes next year.