Barratt Redrow, the largest housebuilder in the UK, announced that the Labour Party's planning reforms to deliver 1.5 million homes are not sufficient and called for more support for first-time buyers. These comments come as the company has reduced its housing construction target due to higher financial burdens and increased regulations.
Reduction in Housing Construction Target
Barratt Redrow built 17,667 new homes in the year ending June 2026, but now expects to complete between 17,500 and 17,900 homes this year, lower than the previous forecast of between 17,700 and 18,200 homes. The company has pointed to ongoing delays in planning and emphasized that the Labour Party must fulfill its promises to resolve these issues.
Barratt has also predicted that high mortgage rates and economic pressures will impact consumer confidence next year. The housing market is currently facing weak demand as lenders have raised rates and construction costs are increasing due to rising prices.
Challenges Facing the Housing Market
Homebuilders are scaling back development, which could make it more difficult for the Labour Party to achieve its goals. Barratt stated, "Only by reducing homeownership barriers and addressing the financial and regulatory burdens affecting housing supply in many parts of the country can the government provide a higher level of housing supply, including affordable housing, and address the housing crisis."
In the past year, Barratt's stock has fallen by over 18%, but on Wednesday, the stock rose by 7.53% or £20.80 to £297.20. The company also reported that its annual pre-tax profit fell by 7.1% to £600 million, while revenue increased by 6.6% to £6.1 billion.
Barratt said, "A more positive start to 2026, with the removal of budget uncertainties and the potential for interest rate cuts, was significantly reversed with the onset of conflict in the Middle East at the end of February. These events and risks related to energy costs, supply chain disruptions, and inflation have led to significant changes in interest rate expectations and made buyers more cautious."
The company has also turned to reducing land costs and approval targets due to rising costs associated with energy prices linked to the conflict in the Middle East.
Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, said, "Looking ahead, the short-term picture remains challenging, and ongoing planning delays and rising construction costs are trending towards 4%. Due to a softening market, buyer incentives are increasing, and forecasts for completions in 2027 have slightly decreased."
This week, one of the largest construction companies in the UK announced that it will no longer invest in property development projects, which is another blow to the Labour Party's housing construction goals.
