Barratt Redrow, the United Kingdom’s largest housebuilder, has trimmed its annual construction target after warning that Labour’s planning reforms will not be enough to solve the housing crisis. The company now expects to complete between 17,500 and 17,900 homes this year, down from an earlier forecast of 17,700 to 18,200. This reduction follows a year in which the firm built 17,667 new homes.
Tax and regulation concerns
The builder cited a “higher tax burden and increased regulation” as key factors constraining the sector. In a statement, Barratt argued that only by reducing barriers to ownership and addressing regulatory and tax costs can the government unlock delivery of affordable housing. The firm has previously called for the abolition of stamp duty for first-time buyers, a proposal it first put forward alongside Rightmove earlier this year, and has been joined in this call by rival builders Berkeley and Bellway.
The company reported a 7.1 per cent fall in annual adjusted pre-tax profit to £600 million, though revenue rose 6.6 per cent to £6.1 billion. The shift in profit came as the mix of homes sold moved towards larger properties in more expensive locations.
Market conditions
Higher mortgage rates and affordability pressures continue to weigh on consumer confidence. The housing market faces subdued demand as lenders raise rates amid the war in the Middle East. Barratt also anticipates building costs will increase by 4 per cent over the next year due to the conflict, which has disrupted supply chains and raised energy cost risks.
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Barratt said that a more positive start to 2026, with budget uncertainties removed and interest rate cuts back on the agenda, was sharply reversed by the start of the Middle East conflict at the end of February. These events, and the corresponding risks around energy costs, disruption to supply chains and inflation, led to a shift in interest rate expectations, making homebuyers more cautious and increasing ongoing affordability challenges in the UK housing market. The firm has been actively cutting its land spending and approval targets in response to these rising costs, anticipating that energy price inflation linked to the geopolitical situation will further squeeze profit margins.
This week Kier Group said it would not invest any more money into property development projects and would shift funds to its core construction and infrastructure operations. The property arm, which largely works through joint ventures, invests and develops both commercial and residential urban regeneration schemes across the UK.
Financial outlook
Barratt Redrow’s share price has fallen by more than 18 per cent over the past year. However, the stock rose 7.53 per cent or 20.80p to 297.20p on Wednesday morning following the confirmation of a £386 million share buyback programme, a move first flagged in July that signals management’s confidence in the company’s valuation.
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