Our report from Crest Nicholson’s 2024 AGM

On 19th March 2024, we attended Crest Nicholson’s Annual General Meeting (AGM) at their offices in Surrey, to ask the board of directors about their progress remediating unsafe buildings. We attended as ShareAction’s shareholder representative and would like to thank them for their ongoing support for our campaign.

Unfortunately, the encounter did not leave us assured that Crest Nicholson are acting with urgency to fix buildings, or that the company understands the enormous impact on leaseholders and residents living in their unsafe homes. 

£145m set aside for remediation of life-critical fire safety defects

Crest currently has the 5th greatest number of buildings in England known to require remediation, according to the latest government data (behind Bellway, Barratt, Taylor Wimpey and Vistry Group). The developer’s latest annual report for the year ending October 2023 (published last month) shows that it has as much as £145m set aside for remediation of fire safety defects, having already spent £27m in previous years. 

Several months before attending the AGM, we had reached out to Crest and had some brief but cordial correspondence with Neil Dawtrey, Special Projects Director. Mr Dawtrey had highlighted some of the industry-wide challenges the company felt had slowed down their remediation progress, and had noted that he expected the data to show noticeable improvement in early 2024. He did not respond to the range of concerning feedback from leaseholders in Crest buildings that we had sent to him, or to our request for a meeting.

Shortly after the AGM, a shared ownership leaseholder in a Crest building in Michael Gove’s constituency shared their feedback about the developer on social media: “Crest’s legacy is a building missing vital fire safety features, their legacy is trapping residents in flats we have been unable to sell, their legacy is anxiety, depression, suicidal feelings, along with the financial impact of believing we were buying a safe home.” 

Many other leaseholders have contacted us about safety defects in their Crest buildings, long delays while legal battles go on in the background, complaints about contractor quality which are left unacknowledged, poor or no communication, and soaring insurance costs that are specifically linked to Crest’s delays in completing remediation work. In this context, we believe it’s important that the collective voice of leaseholders and residents is given more prominence in the mind of senior executives at the company. 

Three out of four shareholder questions at the AGM were on the theme of building safety or quality defects. We asked the Board the first question and started by noting that it was good to see some progress in the last year, since they had signed a self-remediation contract with the Government. However, we were concerned that expenditure was still low, with only £13m spent in the last financial year. We pointed out that the company’s pace of work is much slower than average and that the most recent government data available showed that at 31st October 2023, at least 110 Crest buildings required self-remediation, but works were only underway or completed at 10% of those buildings. We asked: 

• Could the Board please explain how the pace of remediation will increase going forward and when you expect the programme to be complete? Leaseholders and residents would understandably like to see urgency in homes being made safe, sellable and insurable. 

• Secondly, some leaseholders have raised concerns that developer-commissioned risk assessments are reducing the scope of work. Could the Board please describe its approach to quality assurance and dispute resolution? 

• Finally: We are grateful to the Special Projects Director for recent correspondence with us, but would the director responsible for Building Safety be willing to meet with the End Our Cladding Scandal campaign team, to discuss these important issues further? 

“Slower than we would have liked”

Crest Nicholson’s Chair thanked us for acknowledging the progress that had been made. Their CEO, Peter Truscott, then acknowledged that the pace of remediation had been “slower than we would have liked” and that there were sometimes difficulties securing permissions and negotiating legal agreements, particularly with freeholders, as well as delays in sourcing suitable subcontractors. We were told that Crest “couldn’t give a timeline” of when it expected remediation to be complete, and that the process takes time because they “want to do it correctly… and to [only need to] do it once.” 

The reluctance to give a time frame was slightly surprising, because Crest’s annual report states that half of the provision is expected to be used within one year, and the balance within one to five years. Developers are also obliged under the terms of the contract to submit target dates for each building to DLUHC, updated quarterly, so there is no obvious reason the Board should be unable to give an expected time frame to shareholders. We can only speculate that perhaps the Board is conscious that “within five years” doesn’t sound as if it is “as soon as practicable,” which is their legal obligation under the contract. 

From the audience, David Marchant, Group Operations Director, added that DLUHC would shortly issue new data which would reflect Crest’s recent progress. A couple of days after the AGM – and a month later than expected – DLUHC did indeed publish a quarterly update of developer data as at 31st January 2024

Rather oddly, despite another 8 eligible buildings having been identified since the previous quarter, the number of Crest buildings reported to require remediation had reduced from 116 to 101 (-15 buildings), and those requiring self-remediation from 110 to 100 (-10 buildings). DLUHC only publishes the bare data without any commentary on salient points, so unfortunately there is no indication of what is behind this oddity. 

The data also shows that Crest made very little progress on its assessment programme in the quarter, still stuck at just 50% of buildings having had an assessment (the average for all developers is 78%). At this stage, 69% of assessed buildings require remediation, which is almost double the average rate. 

DLUHC’s data does indicate a strong surge of progress on one particular measure. Work had started on site at 56% of buildings where self-remediation is known to be required, up from 10% just three months earlier. Anecdotally, we have heard from leaseholders that at some of these buildings, there may have been just enough activity to demonstrate work had started on site before the new Building Safety Regulator takes control in April, but progress had then halted. We will see if this impression is borne out by any noticeable change of pace in the next quarterly dataset. 

Remediation work might not match what “leaseholders prefer to happen”

Regarding quality assurance, the CEO commented that all risk assessors are “independent and professionally qualified.” He advised shareholders that it was the contract terms that had established that all remediation projects would be carried out to a common standard (PAS 9980), and that might not result in developers undertaking all the work “that leaseholders might prefer to happen.” In his view, there is an adequate route available for dispute resolution through DLUHC, which he said was open to residents; he revealed that one Crest building has been through this process so far. 

The CEO’s reference to the “preferences” of leaseholders felt particularly dismissive. Paying customers, quite rightly, do not expect the homes they bought to be left with defects – particularly after years of living with safety fears, additional costs such as soaring insurance, and difficulties selling and remortgaging. We had to remind ourselves that this was the same company that highlights product quality and customer-centricity in their annual report when it boasts that “We have a ‘right first time’ culture. We are committed to delivering high quality homes and an excellent customer experience is at the heart of everything we do.” 

The CEO finished by stating that the company meets with DLUHC, responsible entities and resident groups in their buildings, but they are busy fixing buildings and “meeting with pressure groups will not improve anything.” We pointed out that every other large developer had engaged with EOCS, and asked if we could briefly speak with the Group Operations Director at the end of the meeting, to which there was no response. 

Over the last two years, our team has attended 10 AGMs, across various industry sectors, and delivered a series of questions that ended with a meeting request. This was the first occasion a company had declined a meeting request after a polite and constructive face-to-face approach, so their refusal to engage with our campaign team was genuinely unusual. 

Residents can use DLUHC’s “mediation service” 

The second shareholder to ask a question at the AGM was a leaseholder and resident of a Crest Nicholson building in Bristol, who spoke of his relief that remediation had recently started after years of uncertainty. After raising some specific technical concerns about their case, he asked what steps the company is taking to ensure work is undertaken in a way that meets building regulations and manufacturer requirements, and to communicate with leaseholders and residents about these issues. 

In their response, the CEO and Group Operations Director again stated their position that all self-remediation work under the contract is carried out to a consistent standard (PAS 9980), that assessors are “independent”, and that residents “can take advantage of DLUHC’s mediation service.” Their response showed a familiarity with the specific building in question and they maintained that residents are being kept informed (although, it seems, insufficiently). David Marchant offered to speak with the shareholder afterwards, at which point he showed interest and asked more detailed questions but was non-committal, with no offer to follow up. 

The same shareholder also asked for assurance that the funds Crest had earmarked for building safety would be sufficient to cover all buildings. Based on the number of buildings currently known to require remediation, the average provision is £1.4m per building. This is significantly below the average of £2m per building set aside by other developers, according to DLUHC’s data – although of course costs can vary significantly depending on the mix of heights, materials and types of defects in the portfolio. The CEO confirmed that the Board considers the provision to be adequate, but did not elaborate further. 

More skeletons in the closet?

This apparent contentment with the size of the building safety provision seemed at odds with an announcement made on the morning of the AGM, which had revealed that since the publication of the FY23 results, the Group had “become aware of certain build defects, predominantly on four sites that were completed prior to 2019… These sites will require remediation over the next three years at an estimated cost of up to £15m. 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.”

These newly discovered defects were the topic of the final question raised at the AGM, by a shareholder who suggested that “it sounds like there could be more skeletons in the closet.” 

In reply, the CEO informed us that the issues were related to water ingress and leaks in timber-frame buildings, but he noted further investigation would be needed to confirm the suspected workmanship issues. No reference was made to life-critical fire safety risks; however, we will wait to see if any linked concerns about fire safety emerge, such as inadequate compartmentation. It is worth noting that these poorly constructed buildings were built up to 2019, so they could well have been built after the Grenfell tragedy. In any event, this announcement is unlikely to boost confidence in the company’s build quality and resilience. We were also struck by the fact it was discussed as a purely financial issue – with no acknowledgment at all of the impact this would have on the lives of leaseholders and residents. 

“Not aware” of any under 11 metre buildings requiring remediation

At the end of the AGM, we approached David Marchant for a short conversation where he reiterated that Crest wouldn’t have time to meet EOCS because they “just want to get on with the work” – although we pointed out that, unfortunately, the data doesn’t suggest that they are “getting on” with the work and a meeting would not slow down the pace of work on site. Elements of the remediation programme that the director felt were outside Crest’s control were again highlighted – such as difficulties agreeing terms with some freeholders and the change to a new Building Safety Regulator from 6th April, which could cause further delays. We were advised that Crest meets with DLUHC’s team every two weeks, which appears to be more frequent than some other developers, according to our understanding. 

An affected leaseholder from an under 11 metre building had considered travelling internationally just to attend the AGM, so we particularly wanted to highlight the issue of low-rise buildings to Mr Marchant. Buildings of this height are outside the current scope of the developer contract, but Crest will be very aware that sometimes they are high-risk and require remediation. The company recently recorded an exceptional charge of £13m to settle a legal claim relating to a serious fire at a low-rise block of flats in Arborfield in 2021, so they should understand the need to take seriously their responsibility to all buildings they developed, regardless of height. We are aware of at least two under 11 metre buildings developed by Crest that currently have a Fire Risk Appraisal of External Walls (FRAEW) stating remediation work is required and which are in the process of being audited by DLUHC. Mr Marchant claimed he was not aware of any under 11 metre buildings being flagged as having any remediation concerns, which would be surprising if true. In any case, we hope now that he is aware, there will be no delay in accepting responsibility if or when DLUHC comes calling. 

We know that many leaseholders and residents remain concerned about “not rocking the boat” when they are having difficulties with a company that they are relying on to make their homes safe – but as Crest Nicholson has declined to engage with EOCS, we strongly encourage you to raise your concerns directly with the developer and with DLUHC. We will continue to monitor any significant issues raised and press DLUHC to take decisive action to support you. 

Are you a leaseholder or resident in a Crest Nicholson building, having issues in relation to assessment or remediation – and unable to get a satisfactory response via your managing agent? Please email the developer directly at [email protected] and copy us at [email protected] if you would like us to be aware of the issues being raised.  

If you need to escalate your concerns to DLUHC, please email [email protected], providing the name and address of your building together with a short summary of your concerns, and detailing the attempts you have made to contact the developer. Please copy our team at [email protected] so that we can follow up where necessary.

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The post Our report from Crest Nicholson’s 2024 AGM appeared first on End Our Cladding Scandal.