Angela Rayner poised to bail out Jeff Fairburn as Avant Homes cladding costs soar to one hundred million pounds

The UK housing sector is witnessing high drama as Housing Secretary Angela Rayner prepares to rescue renowned housebuilding figure Jeff Fairburn whose company’s spiralling cladding remediation liabilities now surpass £100 million. Fairburn, notorious for his £75 million payout while leading Persimmon Homes, is currently the chairman of Avant Homes—one of Britain’s largest yet financially embattled regional developers.

Fresh accounts indicate that Avant’s exposure to fixing unsafe Grenfell Tower style cladding has jumped from £68.4 million last year to £106.9 million. The company, backed by Elliott Management, has also slid deep into loss, recording a pre-tax loss of £83 million for the year ending June 2024, compared with a modest profit the year prior. This escalating financial pressure is compounded by growing doubts about Avant’s liquidity, as flagged by auditors KPMG, and its ability to satisfy both commercial lenders and government obligations.

The initial burden of replacing dangerous cladding was borne by the taxpayer via the Building Safety Fund, designed to swiftly recoup costs from developers. Recent shifts, however, see housebuilders like Avant directly responsible for assessing and repairing at-risk buildings. Negotiations with Rayner’s department have been ongoing for over a year, seeking to defer repayments and spread them over multiple years. Avant now confirms that an agreement is close, but investors and residents alike remain wary, given rising liquidity risks identified as of June 2024.

Supplementing these woes is a sizeable £250 million bank loan, led by HSBC, that was due for repayment in July but has now been extended on a temporary basis while refinancing discussions continue. Proposals would see only £180 million refinanced, reducing to £150 million by March next year, deepening uncertainty over long-term solvency.

Avant’s response emphasises its commitment to addressing the legacy of defective buildings constructed since 1992, many of which predate the current executive team. The company points out the extraordinary technical and legal complexity of these remediations and underlines collaborative efforts with government and financial partners to ensure a sustainable and prompt solution. Meanwhile, shareholder loans accruing at 12 percent interest have compounded Avant’s debt, rising from £356 million to £422 million over the reporting period.

The government stresses that Avant must meet its contractual obligations under the developer remediation contract, reminding all parties that swift resolution and accountability remain paramount for affected residents. The situation underscores the harsh realities facing UK housebuilders now tasked with expediting critical safety works while navigating volatile borrowing conditions and public scrutiny.