Britain’s largest housebuilder is pulling back sharply on land acquisitions, shaving up to £200 million from its buying budget as the fallout from the Iran conflict unsettles mortgage markets and sharpens concerns over materials inflation.
Barratt Redrow, the FTSE 100 developer created by last year’s £2.5 billion tie-up between Barratt Developments and Redrow, told the City on Wednesday that trading held up well through the third quarter of its financial year, the three months to the end of March. The company remains on course to deliver an annual pre-tax profit of roughly £568 million, broadly in line with analyst forecasts.
Yet the tone from the Coalville-based group was markedly more cautious than in previous updates. While management does not expect the Middle East flare-up to dent numbers in the current financial year, which closes at the end of June, visibility into the 2027 period has deteriorated. Higher-for-longer mortgage rates threaten to sap buyer appetite, and bosses acknowledged that the recent spike in energy prices is likely to feed through into the cost of bricks, blocks and other building materials.
The strategic response has been swift. Since the start of July, Barratt Redrow has acquired land for just over 4,000 new homes, a fraction of the more than 15,300 plots it had tied up by the same stage a year earlier. For the full financial year, the developer now expects to add between 7,000 and 9,000 plots, well below its earlier guidance of 10,000 to 12,000. Total land spend has been pencilled in at £700 million to £800 million, compared with a previous ceiling of around £900 million.
Despite the more defensive stance on future sites, current selling conditions have proved surprisingly sturdy. Between January and March, the group’s roughly 400 active outlets averaged 0.67 reservations per site per week, a 6 per cent improvement on the same period last year, when demand was artificially flattered by buyers rushing to beat stamp duty changes. The forward order book now stands at £3.54 billion, up 13 per cent year on year, and the company has already locked in 94 per cent of the completions it is banking on for the full year.
That buffer explains why the board is relaxed about the near-term hit from geopolitics. Incentives, which have been a persistent drag on industry margins, remain elevated, with Barratt Redrow still sweetening deals through upgraded kitchens and deposit contributions. The silver lining, executives said, is that the company has not needed to ratchet these giveaways any higher in recent months.
Volumes are expected to continue climbing. Barratt Redrow built 16,565 homes in the 12 months to June 2025, more than any rival in the country. For the current year, management is guiding to completions of between 17,200 and 17,800 units. The group’s heritage stretches back to 1953, when Sir Lawrie Barratt, a young Newcastle accountant priced out of the home he wanted, decided to build one himself.
Chief executive David Thomas said the quarter had been a solid one, pointing to a resilient reservation rate and healthy customer demand. He argued the combination of a full order book and an advanced build programme would insulate the company from the worst of the macroeconomic noise, while stressing the importance of disciplined capital allocation, selective land investment and tight cost control in the months ahead.
Investors took the update in their stride. Barratt Redrow shares, which have shed 38 per cent over the past year amid wider jitters over rates and affordability, edged 2.2 per cent higher to 264p on Wednesday. A clearer read on build-cost inflation is expected at the group’s next trading update in July, by which point the company hopes to have a firmer grip on how deeply the energy shock will bite into next year’s margins.
