London landlord makes surplus warning after £105m building safety costs

Ian Johnson, MTVH’s chief financial officer, said: “These costs were always fully included in our five-year business plan and now meet the accounting tests for them to be recognised in our financial statements at this point.”

It comes after MTVH announced in April last year it would not pass any costs for remediation work in buildings over 11 metres, or five storeys, in height on to its leaseholders.

The G15 landlord has also written down the value of an undisclosed number of buildings where it said the “expected life” of the properties was “materially reduced”. 

The group will aim to recoup costs on these buildings from third parties “wherever possible”.

The costs reveal the extent of work still needed by many landlords, particularly in London, to tackle building safety. The G15 group said previously it expected its members’ spend to hit £3.6bn by 2036.

In its update, MTVH said: “These one-off provisions and impairments totalling £105m will be reflected in the group’s operating surplus and total surplus results for FY24. Underlying operating results remain in line with our expectations.”

In its last full year, the group reported an 18% drop in post-tax surplus, to £33.5m, partly due to rising costs.

It was the second year in a row that MTVH had experienced a fall in surplus. In its 2021-22 year, it was hit by a provision for “non-recoverable” costs from the Worcester Park fire in 2019.

Last month, rating agency S&P revised its outlook on MTVH from negative to stable and affirmed its A- credit rating.

However, in its report, S&P said the size of the landlord’s fire and safety programme remained “significant” and it was “likely to hinder improvement in the group’s adjusted EBITDA margins”.

MTVH told the markets that S&P’s rating included estimates of the £105m costs.

The landlord said it would report its annual results this summer, but did not give a date.