Barratt Redrow, Britain’s biggest housebuilder, has reported higher revenues and profits but warned that uncertainty over government tax policy could dampen demand in an already challenging property market.
Solid Results Despite Weak Market
The group, formed after Barratt’s £2.5bn takeover of Redrow last October, said revenues rose 33.8% to £5.6bn in the year to 29 June, while adjusted pre-tax profits climbed 26.8% to £488.3m.
It completed 16,565 homes over the year, slightly below forecasts, but raised its annual dividend as profits came in ahead of expectations. The company, which also owns David Wilson Homes, now expects to build between 17,200 and 17,800 homes this year, provided the autumn selling season holds up.
Chief executive David Thomas said the performance was “solid” given the backdrop of high borrowing costs and squeezed household budgets.
Mortgage Costs Bite
Buyers continue to face pressure from elevated mortgage rates, with the Bank of England expected to keep its base rate at 4% this week. Inflation remains at 3.8%, almost double the Bank’s 2% target, while growth across the wider economy has been subdued.
According to the Office for National Statistics, average UK house prices were up 2.8% in July compared with a year earlier, though growth has slowed since March, when many buyers rushed to complete before a tax break expired. Nationwide has reported that prices unexpectedly fell again in August, with high mortgage costs weighing on demand.
Budget Uncertainty
Thomas said the housing market outlook was complicated further by “the extended period through to the budget and related uncertainties around general taxation and that applicable to housing”.
Analysts fear potential changes in stamp duty and other taxes in the autumn budget — set for 26 November — could prompt buyers to delay purchases.
The uncertainty comes as rents continue to rise, though at a slower pace. ONS figures show private rents were up 5.7% year-on-year in August, easing from 5.9% in July.
Sector Pressures
The Barratt–Redrow merger has already delivered £69m of planned £100m cost savings, with six divisional offices shut and three more set to close. Thomas described the deal as “transformative” and said integration was largely complete.
He called on ministers to provide greater clarity and support for the sector, particularly for first-time buyers. “It is vital that government policy is focused on reforming the planning system, removing barriers to investment and supporting purchasers if the sector is to build the homes the country needs,” he said.
The government has pledged to build 1.5m homes over five years, with increased funding for affordable housing. But the resignation of former housing secretary Angela Rayner last month has raised questions about policy stability.
