Telford Homes has reported a loss of £193m for the previous year, which the developer has blamed on the Building Safety Pledge
The London-based private rental flat developer was acquired by CBRE, a global real estate investor, four years ago for £267m.
Before its acquisition, Telford Homes had been transitioning to a lower-risk build-to-rent model. They focused on delivering projects for housing associations and specialised rental property investors as per their requirements.
Several factors have added to Telford Homes’s financial troubles
However, since becoming part of CBRE, Telford has achieved a pre-tax profit only once, a modest £1.7m in 2020.
2021 the company faced a significant setback, reporting a loss of £14m. This was mainly due to delays and expenses caused by a subcontractor’s failure during the refurbishment of the 27-storey Balfron Tower, designed by architect Erno Goldfinger, in East London.
The Building Safety Pledge compounded the company’s issues
Recent accounts, dated until December 2022, revealed significant financial challenges for Telford Homes. These stem from their commitment to the Government’s Building Safety Pledge in May 2022, requiring an estimated £143m for fire safety remedial work.
Each developer who signed this pledge was required to refund any government remediation funding for their projects. The agreements, made in collaboration with developers and the Home Builders Federation, are designed to protect leaseholders from fire safety expenses.
Every developer was made to sign a binding contract and inform affected leaseholders of their commitments.
The financial hit caused by the Building Safety Pledge was made worse by losses in onerous build-to-rent contracts and additional setbacks in the Balfron Tower project, which ended in the summer. Even before factoring in these exceptional losses, Telford Homes reported a pre-tax loss of £18m, despite a 5% increase in turnover to £296m.
Telford Homes has 280 employees and was in the process of expanding beyond London into commuter belt towns in recent years.
