Britain’s biggest housebuilder is tightening its hand on the chequebook, reducing land acquisitions by up to £200 million in response to what its board called “some minor setbacks” caused by the ongoing conflict in Iran, as sales continue to take hold.
Barratt Redrow, which is set up from Redrow’s £2.5 billion takeover of Barratt Developments in 2024, told the market on Wednesday that trading between January and March had proved “strong”, ending up on track to deliver a full-year pre-tax profit of £568 million in line with City forecasts. Its fiscal year will run until the end of June.
Yet beneath the reassuring headline numbers, management is making little secret of its warning about the next twelve months. Although the group does not expect the crisis in the Middle East and rising mortgage rates to affect its current financial year, directors warned that “the outlook beyond the current financial year remains uncertain”.
For real estate investors, the results are twofold. Higher than long-term borrowing costs threaten to cool consumer demand just as energy-driven inflation begins to feed into construction material prices, a general squeeze on developer margins.
In response, the FTSE 100 group adopted what its chief executive David Thomas described as “a disciplined approach to capital allocation, world-class investment and strict cost control”. Since the beginning of July, Barratt Redrow has acquired land capable of supporting just over 4,000 new homes, which is a dramatic drop from the more than 15,300 estates it took at the same time last year.
For the full fiscal year, the developer now expects to add between 7,000 and 9,000 plots to its land bank, well below the previous guidance range of 10,000 to 12,000. Global capital is being recovered between £700 million and £800 million, compared to the £900 million target.
The marketing picture, meanwhile, remains very encouraging. Between January and March, Barratt Redrow’s nearly 400 active sites delivered an average booking rate of 0.67 houses per week, a 6 per cent improvement on the same three months of 2025, a period tempered by a last-minute rush before stamp duty changes. The forward order book has swelled to £3.54 billion, 13 per cent ahead of last year, and the group has banked 94 per cent of the sales it expects to complete before the end of June.
That strong front cover is why the administration believes the fallout from the Iran war will be “limited” this year. In the twelve months to June 2025, the group is building 16,565 houses and flats, more than any other developer in Britain, and is targeting to complete between 17,200 and 17,800 homes this year.
Sales incentives, such as upgraded kitchens and deposit offers, remain stubbornly higher than the wider industry would prefer, although Barratt Redrow has insisted it has at least resisted the need to sweeten more offers in recent months.
A major concern for the 2027 financial year is the increase in construction costs, as electricity prices have increased significantly since the beginning of March. The company said it would provide “better visibility into rising construction costs next year” at its next trading update in July.
“Barratt Redrow had a strong third quarter, with strong bookings supported by good customer demand,” Mr Thomas said. “Despite macroeconomic uncertainty, we expect the Middle East conflict to have a limited impact on performance in 2026, given our strong sales position and advanced construction program.”
The group’s roots date back to 1953, when Sir Lawrie Barratt, a young accountant from Newcastle, frustrated at not being able to afford the house he wanted, decided to build his own. More than seventy years later, his successors navigated an entirely different set of spirits.
Shares in Barratt Redrow, which have shed 38 per cent of their value in the past year, rose 2.2 per cent to 264p in trading on Wednesday, indicating that investors took little comfort in the strong near-term outlook as the long-term picture changed.
