UK’s largest housebuilder to buy less land in blow to Labour’s homes target
Britain’s largest housebuilder is planning to dramatically cut back on buying new land, blaming the impact of the conflict in the Middle East and putting Labour’s ambitious housing target under more pressure.Barratt Redrow said it intended to approve between 7,000 and 9,000 plots of land for purchase in its current financial year, far lower than previous guidance of between 10,000 and 12,000.The company, which had already committed to buying less land this year than the previous year, said “geopolitical events” had prompted the further reduction.“Now, with a less certain backdrop, given recent geopolitical events and their likely impact on mortgage rates and build cost, we are being even more selective,” the company said.As a result, Barratt Redrow now expects to spend between £700m and £800m on land this year, down from previous guidance of between £800m and £900m.
Earlier this month the London-focused housebuilder Berkeley said it would stop buying new land, implement a hiring freeze and employ fewer subcontractors in response to the impact of “geopolitical volatility” on the property market,The move to curtail land-buying plans by two of Britain’s biggest housebuilders puts Labour’s ambitious pledge to build 1,5m new homes over five years under even more pressure,In Labour’s first year in power, 140,860 homes were completed in England, and just under 116,000 homes were started, far below the required annual run rate of 300,000 to achieve its target, according to analysis by the Centre for Policy Studies,The former housing secretary Angela Rayner, who quit the government in September after admitting underpaying stamp duty on a flat, pushed through a raft of measures that were welcomed by housebuilders, including planning reforms as well as announcing £39bn for a 10-year social and affordable housing programme.
High interest rates, rising construction costs and complex planning rules have weighed on construction in London in particular, where only 4,522 social and affordable homes were started in 2024-25, down sharply from the 26,386 starts in 2022-23, according to the Ministry of Housing, Communities and Local Government (MHCLG),This prompted the government and the London mayor to announce emergency measures last month to unblock dozens of stalled sites and build thousands more homes, including fast-track planning for sites providing at least 20% affordable housing, down from the previous 35% target,However, on Wednesday, the consultancy Molior described London mayor Sadiq Khan’s goal to build 88,000 homes annually in the capital as “impossible”,It found that only 2,103 private new homes were started between January and March this year,A spokesperson for the mayor said the new measures, which include new powers for City Hall to review housing projects and record funding in low-cost loans, would “ramp up housebuilding in London and bring forwards thousands of homes more quickly”.
An MHCLG spokesperson said: “We will build the homes this country needs,We’ve overhauled the planning system and invested a record £39bn in social and affordable housing to help developers get spades in the ground and weather any geopolitical pressure,”Oli Creasey, the head of property research at Quilter Cheviot, said: “Barratt had already committed to buying less land this year compared to what had been sold in order to optimise the size of its landbank,“However, that guidance has today been reduced by a further 3,000 plots, meaning that only around half of the land sold this year will be replaced,Following Berkeley Group’s decision to slow land purchases, there is increased concern that the housebuilding sector is digging in for another tough period.
”David Thomas, the chief executive of Barratt Redrow, said he did not expect the conflict in the Middle East to affect the company’s performance this year.Almost 95% of the company’s sales target for this financial year has already been locked in, and it reiterated its guidance of building 17,200 to 17,800 new homes and achieving £568m in pre-tax profits.Its share price has fallen by almost 40% over the past year, but rose 2.9% on Wednesday.“Barratt Redrow’s valuation has taken a big hit in recent months due to the Middle East conflict,” said Aarin Chiekrie, an equity analyst at Hargreaves Lansdown.
“It could be a while before macroeconomic conditions turn more favourable, so potential investors will need plenty of patience,”
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