Britain’s biggest housebuilder is tightening its control of the checkbook, cutting property acquisition spending by up to £200 million in response to what its board called an “uncertain backdrop” caused by the ongoing conflict in Iran, even as local sales continue to hold up.
Barratt Redrow, formed from the £2.5bn takeover of Redrow by Barratt Developments in 2024, told the market on Wednesday that trading between January and March had proved “resilient” and the company remained on track to make full-year pre-tax profits of around £568m, in line with the City’s forecasts. The fiscal year runs until the end of June.
But despite the reassuring headlines, management made little secret of its caution about the coming twelve months. Although the group does not expect the Middle East crisis and subsequent rise in mortgage rates to derail the current financial year, directors warned that “the outlook beyond the current financial year remains more uncertain”.
This has two implications for real estate investors. Longer-term higher borrowing costs threaten to cool buyer demand just as energy-related inflation begins to impact building material prices, a classic squeeze on developers’ margins.
In response, the FTSE 100 group is pursuing what its chief executive David Thomas described as a “disciplined approach to capital allocation, selective land investment and strict cost control”. Since the start of July, Barratt Redrow has secured land capable of building just over 4,000 new homes, a drastic fall from the more than 15,300 properties the company had acquired at the same time last year.
For the entire financial year, the developer now expects to expand its property portfolio by 7,000 to 9,000 properties, which is well below the previous forecast of 10,000 to 12,000. Total land spending will be reduced to between £700m and £800m, compared to the £900m previously earmarked.
The sales picture remains more encouraging for now. Between January and March, Barratt Redrow’s around 400 active sites delivered an average reservation rate of 0.67 homes per week, a 6 per cent improvement on the same three months in 2025, a period flattered by a last-minute rush ahead of stamp duty changes. The forward order book has grown to £3.54 billion, up 13 per cent on the previous year, and the group has already deposited 94 per cent of the sales it expects to complete before the end of the year in June.
This strong forward cover is precisely why bosses expect the fallout from the Iran war to be “limited” this year. In the 12 months to June 2025, the group built 16,565 houses and apartments, more than any other developer in the UK, and expects to complete 17,200 to 17,800 homes this year.
Sales incentives such as upgraded kitchens and deposit contributions remain stubbornly higher than the wider industry would like, although Barratt Redrow stressed it had at least resisted the need to further embellish offers in recent months.
The bigger concern for fiscal 2027 is construction cost inflation as energy prices have risen sharply since early March. The company said it would provide “better visibility into construction cost inflation for next year” in its next trading update in July.
“Barratt Redrow had a solid third quarter with a robust reservation rate supported by good customer demand,” Mr Thomas said. “Despite increased macroeconomic uncertainty, we expect the Middle East conflict to have limited impact on performance in 2026 given our strong position in forward sales and our 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 one himself. More than seven decades later, his successors are struggling with completely different challenges.
Shares in Barratt Redrow, which have lost 38 per cent of their value over the past year, rose 2.2 per cent to 264 pence in Wednesday trading, suggesting investors were taking some comfort from the robust short-term outlook even as the longer-term outlook darkens.
