Barratt Redrow completions fall short in latest blow to Labour's new home drive
Barratt Redrow had planned to build between 16,800 and 17,200 new homes in the 12 months to 29 June – making it a vital player in the government's efforts to boost development.
But the company on Tuesday revealed it only built 16,565 homes, due in part to subdued demand from international buyers amid reports they have been put off by high taxes.
The update is a setback for Labour's plan for 1.5million new homes to be built in this Parliament – or 300,000 a year.
And in a further blow, Barratt warned that confidence among buyers 'remains fragile'.
The update sent Barratt shares tumbling more than 11 per cent in early trading to their lowest since October 2022. Other major housebuilders also fell, with fellow FTSE 100 groups Persimmon, Taylor Wimpey and Berkeley all down more than 2 per cent
Chief executive David Thomas highlighted a lack of demand for new homes in London among international buyers amid reports the wealthy are fleeing the UK over concerns about high taxes.
He added: 'Demand during the year has been impacted by consumer caution and mortgage rates not falling as quickly as hoped.'
Julie Palmer, a partner at Begbies Traynor, said: 'The long-anticipated rebound in housebuilding has yet to take hold. Indeed, the drag from weak consumer confidence, elevated mortgage rates, and a lack of meaningful government intervention continues to limit what otherwise capable operators can deliver.
'Barratt clearly has strong fundamentals in place, but like the rest of the sector, it is constrained by forces beyond its control. Still, where many smaller players are struggling to stay afloat, Barratt's scale and strength leave it well placed to ride out the current situation and lead the recovery when conditions improve.'
The disappointing figures came as Chancellor Rachel Reeves said first-time buyers are set to see an 'instant impact' from looser lending rules.
More mortgages will be available at more than 4.5 times a buyer's income following recent Bank of England recommendations that some lenders can offer more high loan-to-income mortgages if they choose to.
This will create up to 36,000 additional mortgages for first-time buyers over the first year, the Government said.
Hopes are also mounting that the Bank of England will cut interest rates again next month – from 4.25 per cent to 4 per cent – in a further boost for borrowers.
However, the pace of rate cuts remains slower than many expected, leaving mortgage rates elevated for many borrowers.
In a trading statement to the City, Barratt said: 'Homebuyer confidence remains fragile. We have seen some improvement in mortgage market competition and availability but underlying private sales activity has remained sensitive to consumer caution, driven by the economic backdrop and the ongoing affordability challenges faced by homebuyers.'
Barratt Redrow, which was formed after the merger of the two eponymous companies last year, said it expects profits for the year to be in line with a consensus of analyst forecasts of £582.6million.
It also expects to build between 17,200 and 17,800 new homes in the coming 12 months.
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