Housebuilder cites uncertainty on rates and materials inflation beyond the current year
Barratt Redrow has cut back its land buying plans as the war in Iran drives up energy prices and looks set to add to construction costs, a combination that could also keep mortgage pricing higher for longer.
The FTSE 100 housebuilder, formed after Barratt Developments bought Redrow for £2.5 billion in 2024, said trading in its third quarter was steady and it remained on course to meet market expectations for the year to the end of June.
“The ongoing conflict in the Middle East is contributing to increased economic uncertainty, including the potential for a more prolonged higher interest rate environment and renewed cost pressures,” the company stated. “While we currently expect any direct impact on the 2026 full year to be limited, visibility beyond the current financial year remains more uncertain.”
Against that backdrop, the group is reducing land acquisition. Since the start of its financial year in July, Barratt Redrow has agreed land capable of supporting just over 4,000 new homes, compared with more than 15,300 plots at the same point last year. It now expects land approvals of 7,000 to 9,000 plots for the full year, down from earlier guidance of 10,000 to 12,000, and has trimmed planned land spend to £700 million to £800 million.
“We will continue to closely monitor developments while maintaining a disciplined approach to capital allocation, selective land investment and rigorous cost control,” said David Thomas (pictured right), chief executive of Barratt Redrow.
Barratt Redrow said the net private reservation rate averaged 0.67 homes per week in the quarter, more than 6% higher than a year earlier, while forward sales totalled £3.54 billion at the end of March. It completed 3,274 homes in the period and reiterated guidance for 17,200 to 17,800 completions for the full year.
The company expects build cost inflation to average about 2% this year, rising to about 3% in the second half, and said it would give “better visibility on build cost inflation for next year” at its next trading update in July.
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