Britain’s largest housebuilder Barratt Redrow has warned of a “tough market” and expects little growth in the next 12 months amid uncertainty around property taxes.
David Thomas, the executive of the company, which was enlarged by Barratt’s £2.5bn acquisition of Redrow last October, cautioned that “the housing market remains challenging and we anticipate limited growth in 2026”.
High mortgage costs have squeezed homebuyers’ budgets. The Bank of England is widely expected to keep its base rate at 4% on Thursday. It faces a balancing act in light of stubborn inflation of 3.8%, almost double its target and partly caused by high food prices, while the jobs market is cooling and economic growth remains weak.
However, Barratt Redrow raised its annual dividend after reporting a 33.8% increase in revenue to £5.6bn in the year to 29 June.
Reporting full-year results for the combined group for the first time, the builder delivered 16,565 home completions, slightly below expectations. Adjusted profit before tax rose by 26.8% to £488.3m.
Thomas said: “We have delivered a solid performance in a tough market, with adjusted profits ahead of expectations despite home completions coming in slightly below our guided range.”
The group expects to complete between 17,200 and 17,800 homes this year, assuming a normal autumn selling season. However, it cautioned that “the extended period through to the budget and related uncertainties around general taxation and that applicable to housing, has introduced additional risk”.
Analysts fear buyers could hold off purchases as they wait for clarity on potential changes in stamp duty and other taxes in the autumn budget, which is scheduled for 26 November. The Westminster set-piece will take place a month later than last year, when the chancellor, Rachel Reeves, presented her first budget in late October.
Thomas said Barratt’s acquisition of Redrow was “transformative” for the group, and that it had delivered cost savings ahead of its targets (£69m out of £100m), adding that the integration was now largely complete. Six divisional offices have been closed and three more are closing.
He stressed that “it is vital that government policy is focused on reforming the planning system, removing barriers to investment and supporting purchasers, particularly first-time buyers, if the sector is to build the homes the country needs”.
Last year, the government set an ambitious target of building 1.5m homes over five years, with a focus on social and affordable housing. In June this year, then-housing secretary Angela Rayner nearly doubled spending on affordable housing to £39bn. It is unclear whether Rayner’s recent resignation has affected housebuilders’ confidence in government policies.
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Average house prices in the UK were 2.8% higher in July than a year earlier, down from 3.6% price growth in June, according to the latest official figures from the Office for National Statistics released this morning.
Growth has slowed sharply since hitting a two-year high in March, when buyers rushed to complete sales before a tax break on house purchases expired.
According to Nationwide Building Society, house prices unexpectedly fell in August, with continued high mortgage costs dampening activity.
Rents charged by private landlords rose by 5.7% year-on-year in August, down from an annual rate of 5.9% in July – the smallest annual increase since December 2022.