UK's Barratt Redrow warns of cost pressures as it slashes land targets, cuts spending

Wed, 15th Apr 2026 09:19

* Land approval target cut to 7,000-9,000 plots from 10,000-12,000

* Build cost inflation for ⁠fiscal 2026 seen at 2%

* Higher energy costs may hit fiscal 2027, company says

* Group keeps profit guidance, warns of limited visibility beyond fiscal 2026 (Adds details on cost expectations, background ‌on sector throughout, shares in paragraph 3 and analyst comment in 7)

April 15 (Reuters) - Britain's largest homebuilder Barratt Redrow on Wednesday ⁠slashed its land spending and approval targets, saying costs may rise ⁠in the next fiscal year due to higher energy prices stemming from the Middle East conflict.

The group had already trimmed land approvals - meaning it would seek building approval for fewer plots - in February, and is now further scaling back it back by 25%-30%, citing fewer attractive ‌opportunities and current market conditions.

However, it said demand remained resilient, with its net private reservation rate - a measure of how many new homes a housebuilder is selling or leasing - including bulk rental deals rising 6.3% in the 13 weeks to March 29, helping lift shares nearly 3%.

RISKS FLAGGED ACROSS HOUSEBUILDING SECTOR

The defensive stance follows warnings from across the sector, including from Berkeley, which has signalled slower profit growth and paused ‌land buying.

Rivals Taylor Wimpey and Bellway have flagged risks from higher building costs and interest rate uncertainty squeezing affordability for buyers.

Barratt Redrow maintained its ‌guidance for 2% build cost inflation overall for fiscal 2026, but warned that higher energy costs are likely to be reflected in increased building material costs in the year from July 2026 to June 2027.

The sector is bracing for higher oil and energy prices, which could drive up costs for energy-intensive materials such as bricks and plasterboard, prompting ‌builders to plan for alternative supply options.

CUTTING LAND SPEND A WISE CALL

RBC analyst Anthony Codling said the move to limit land buying is a wise call, noting that "Barratt is doing all that it can".

The company said ⁠it now ⁠expects to approve between 7,000 and 9,000 plots this financial year ‌and cut its land spending estimate to 700 million-800 million pounds ($949.6 million to $1.09 billion) as it becomes "even more selective" in an uncertain environment.

Barratt Redrow reaffirmed its profit and home completion forecasts for the year through June and now ‌expects net cash ahead of previous guidance due to delayed building remediation payments and reduced investment.

However, outgoing CEO David Thomas warned of limited visibility beyond the current financial year amid rising geopolitical tensions.