Latest news with #BarrattRedrow
Time of India
a day ago
- Business
- Time of India
UK's Barratt Redrow misses home completion target, warns of 'fragile' buyer confidence
BENGALURU: Britain 's largest homebuilder Barratt Redrow on Tuesday missed its annual forecast for home completions and warned confidence among buyers remained "fragile", sending its shares down almost 13%. The group announced 16,565 home completions for the year ended June 29, below its forecast of 16,800 to 17,200, chiefly due to delays in transferring ownership to international customers and to the private rented sector in London . Completions involve homes that have been built and the official transfer of ownership to the buyer. London has been a weak spot for Barratt Redrow in the past year as completions and margins have been weaker than in its regional business. Britain's faltering economy is weighing on consumer confidence and tempering housing demand, overshadowing a gradual decline in interest rates and government incentives that have recently offered some optimism. The slow roll-out of reforms to enhance safety and modernise the housing sector has also hampered delivery targets for builders, including Barratt Redrow, which expects its average number of sales outlets to be broadly flat in fiscal 2026. High-end homebuilder Berkeley , which has a strong London presence, in June cut its profit expectations for the next two years, blaming market and regulatory pressures. "Homebuyer confidence remains fragile," Barratt Redrow said in a trading statement, echoing concerns around affordability raised by rivals including Persimmon and Vistry . While government support could help demand, particularly in high-cost areas like London and South East England, Barratt Redrow is leaning on incentives like topping up deposits to support buyers, CEO David Thomas said during an analyst call. Shares in the FTSE 100-listed company hit their lowest since October 2022 on Tuesday, and pulled the broader housing index down 4.7%. Barratt Redrow, formed after the merger of the two eponymous companies last year, said it expected fiscal 2025 adjusted profit before tax and charges to be in line with analysts' consensus forecast of 582.6 million pounds ($783.1 million). For fiscal 2026, it expects home completions to rise to between 17,200 and 17,800.
The Herald Scotland
2 days ago
- Business
- The Herald Scotland
Housebuilders' £100m offer after probe ‘definitely looks dodgy', Parliament told
They argued the Government should insist on the watchdog completing its probe. Assurances were also sought that the housebuilders at the centre of the inquiry would not be involved in building the affordable homes funded by the payout, which would see the firms 'simply get their money back'. The CMA announced last week that Barratt Redrow, Bellway, Berkeley Group, Bloor Homes, Persimmon, Taylor Wimpey and Vistry had offered the payment as part of a package of commitments to address concerns following the investigation, which was launched last year. The settlement, which is set to go into affordable housing programmes across the UK, would be the largest ever secured by the CMA through commitments from firms under investigation. The CMA will now consult on the commitments until July 24 and, if accepted, it will mean the regulator does not need to rule on whether the companies broke competition law. As well as the payment, the housebuilders have agreed legally binding commitments not to share commercially sensitive information with rivals, such as the prices that houses were sold for, except in 'limited circumstances', the CMA said. They also agreed to work with the Home Builders Federation and Homes for Scotland to develop industry-wide guidance on information sharing. The firms have said the offer of voluntary commitments does not mean they admit any wrongdoing. Speaking in the House of Lords, housing minister Baroness Taylor of Stevenage said: 'The £100 million additional funding proposed for affordable housing will mean more families can benefit from a safe and secure home.' But Liberal Democrat Baroness Thornhill, a vice president of the Local Government Association, said: 'There could be an alternative version to this – major housebuilders pay £100 million to halt the CMA's investigation into potential illegal collusion through the sharing of competitively sensitive information that could have inflated house prices. 'While this settlement might appear a pragmatic, cost-effective solution, would it not be more useful to have some evidence-led answers about whether the business models of the major developers are a significant factor in the slow delivery of housing? 'Therefore, should not the Government insist that the CMA actually completes its investigation, rather than allowing a financial settlement that obscures the fact and definitely looks dodgy?' Responding, Lady Taylor said: 'The CMA is continuing its work on this, and on July 9 it announced that it is consulting on its intention to accept commitments offered by the housebuilders in relation to the investigation. 'That consultation closes on July 25, and I have already set out some of the commitments that the seven companies have made. 'The £100 million payment, the largest secured through commitments from companies under investigation, will be split between affordable housing programmes across all our four nations. 'I hope that will make a significant contribution to delivering the affordable housing we all want to see.' Tory former housing minister Lord Young of Cookham said: 'If the Competition and Markets Authority confirms this £100 million payment for anti-competitive activity, can the minister give an assurance that none of the affordable homes to be built with that money will be built by the volume housebuilders responsible for this activity? Otherwise, they'll simply get their money back.' Lady Taylor said: 'I am sure that the Competition and Markets Authority, as part of its consultation, will be looking at the best way of distributing that money, so it is not just recycled to the people who caused the problem in the first place.' Liberal Democrat Lord Rennard said: 'The one-off payment of £100 million towards affordable housing is only about 3% of the operating profit of the five biggest housebuilders this year. Is this a relatively small penalty for them to pay for anti-competitive practices over many years?' Lady Taylor said: 'This is the biggest settlement ever achieved by the CMA.' She added: 'We have to consider what is appropriate in these circumstances. I am sure the CMA has done that.' A CMA spokesperson said: 'Our year-long study of the housing market found that the complex and unpredictable planning system, together with the limitations of speculative private development, was responsible for the persistent under-delivery of new homes in the UK. 'It was also clear that concerns about sharing of confidential information, while important, were not the main driver of the undersupply of housing. 'The £100 million payment we have secured for affordable housing would provide immediate benefits across the UK, without a lengthy further investigation. 'It is in line with fines levied in similar cases that have taken many years to conclude and comes alongside a set of commitments which fully addresses our competition concerns.' Bellway, which has agreed to pay £13.5 million, said: 'Bellway's offer of commitments does not constitute an admission of any wrongdoing, and the CMA has made no determination as to the existence of any infringement of competition law. 'Bellway welcomes the CMA's consultation on the voluntary commitments and will continue to work constructively with the CMA throughout the process.' Berkeley declined to comment.
The Independent
2 days ago
- Business
- The Independent
Housebuilders' £100m offer after probe ‘definitely looks dodgy', Parliament told
An agreement by seven housebuilders to pay a record £100 million to help fund affordable new homes after an investigation into concerns they shared commercially sensitive information 'definitely looks dodgy', Parliament has been told. Critics at Westminster suggested the developers made the offer to halt the investigation by the Competition and Markets Authority (CMA) 'into potentially illegal collusion … that could have inflated house prices'. They argued the Government should insist on the watchdog completing its probe. Assurances were also sought that the housebuilders at the centre of the inquiry would not be involved in building the affordable homes funded by the payout, which would see the firms 'simply get their money back'. The CMA announced last week that Barratt Redrow, Bellway, Berkeley Group, Bloor Homes, Persimmon, Taylor Wimpey and Vistry had offered the payment as part of a package of commitments to address concerns following the investigation, which was launched last year. The settlement, which is set to go into affordable housing programmes across the UK, would be the largest ever secured by the CMA through commitments from firms under investigation. The CMA will now consult on the commitments until July 24 and, if accepted, it will mean the regulator does not need to rule on whether the companies broke competition law. As well as the payment, the housebuilders have agreed legally binding commitments not to share commercially sensitive information with rivals, such as the prices that houses were sold for, except in 'limited circumstances', the CMA said. They also agreed to work with the Home Builders Federation and Homes for Scotland to develop industry-wide guidance on information sharing. The firms have said the offer of voluntary commitments does not mean they admit any wrongdoing. Speaking in the House of Lords, housing minister Baroness Taylor of Stevenage said: 'The £100 million additional funding proposed for affordable housing will mean more families can benefit from a safe and secure home.' But Liberal Democrat Baroness Thornhill, a vice president of the Local Government Association, said: 'There could be an alternative version to this – major housebuilders pay £100 million to halt the CMA's investigation into potential illegal collusion through the sharing of competitively sensitive information that could have inflated house prices. 'While this settlement might appear a pragmatic, cost-effective solution, would it not be more useful to have some evidence-led answers about whether the business models of the major developers are a significant factor in the slow delivery of housing? 'Therefore, should not the Government insist that the CMA actually completes its investigation, rather than allowing a financial settlement that obscures the fact and definitely looks dodgy?' Responding, Lady Taylor said: 'The CMA is continuing its work on this, and on July 9 it announced that it is consulting on its intention to accept commitments offered by the housebuilders in relation to the investigation. 'That consultation closes on July 25, and I have already set out some of the commitments that the seven companies have made. 'The £100 million payment, the largest secured through commitments from companies under investigation, will be split between affordable housing programmes across all our four nations. 'I hope that will make a significant contribution to delivering the affordable housing we all want to see.' Tory former housing minister Lord Young of Cookham said: 'If the Competition and Markets Authority confirms this £100 million payment for anti-competitive activity, can the minister give an assurance that none of the affordable homes to be built with that money will be built by the volume housebuilders responsible for this activity? Otherwise, they'll simply get their money back.' Lady Taylor said: 'I am sure that the Competition and Markets Authority, as part of its consultation, will be looking at the best way of distributing that money, so it is not just recycled to the people who caused the problem in the first place.' Liberal Democrat Lord Rennard said: 'The one-off payment of £100 million towards affordable housing is only about 3% of the operating profit of the five biggest housebuilders this year. Is this a relatively small penalty for them to pay for anti-competitive practices over many years?' Lady Taylor said: 'This is the biggest settlement ever achieved by the CMA.' She added: 'We have to consider what is appropriate in these circumstances. I am sure the CMA has done that.' A CMA spokesperson said: 'Our year-long study of the housing market found that the complex and unpredictable planning system, together with the limitations of speculative private development, was responsible for the persistent under-delivery of new homes in the UK. 'It was also clear that concerns about sharing of confidential information, while important, were not the main driver of the undersupply of housing. 'The £100 million payment we have secured for affordable housing would provide immediate benefits across the UK, without a lengthy further investigation. 'It is in line with fines levied in similar cases that have taken many years to conclude and comes alongside a set of commitments which fully addresses our competition concerns.' Bellway, which has agreed to pay £13.5 million, said: 'Bellway's offer of commitments does not constitute an admission of any wrongdoing, and the CMA has made no determination as to the existence of any infringement of competition law. 'Bellway welcomes the CMA's consultation on the voluntary commitments and will continue to work constructively with the CMA throughout the process.'
Yahoo
2 days ago
- Business
- Yahoo
Housebuilding giant hit by London exodus as sales slump
One of Britain's biggest housebuilders has warned of weaker-than-expected sales as buyers shun London. Barratt Redrow sold 16,565 homes in the year ending June 29, falling short of a forecast of between 16,800 and 17,200 that it had set out in April. The developer cited 'fewer international and investor completions than expected' in London, adding that 'homebuyer confidence remains fragile and mortgage rates remain high compared to recent years'. The housebuilder stated: 'The London housing market has been particularly challenging with weak demand from both domestic and international homebuyers.' London's housing market has slumped after the Chancellor ended stamp duty discounts in April. Mortgage rates have also stayed higher than expected, which has dented affordability. These have resulted in a wave of price reductions across the capital. Shares in Barratt Redrow fell by as much as 13pc in early trading before recovering to around 8pc in the mid-morning. Around £778m has been wiped off its value. Barratt Redrow said it expected to sell between 17,200 and 17,800 homes in its 2026 financial year, reflecting 'revised expectation of broadly flat average sales'. None the less, it noted that mortgage market competition and availability have improved. The bill for repairing safety defects on high-rise homes, required to avoid another Grenfell-style cladding disaster, has also risen by around £98m to total £248m after discovering issues at buildings within its southern division and at a large London development. It said it will pursue its subcontractors to recover those costs. However, the developer said it will deliver profit in line with market expectations, which will be shared in future trading updates. David Thomas, chief executive, said: 'Although demand during the year has been impacted by consumer caution and mortgage rates not falling as quickly as hoped, there remains a long-term structural under-supply of housing in this country. 'We remain confident in our medium-term ambition to deliver 22,000 high-quality homes a year, and in the long-term demand for our high-quality homes.' The news comes after findings by Molior showed sales of new-build homes in the capital plunged to their lowest level since the global financial crisis. The decline, which was more pronounced over the past three months, was blamed on the insufficient financial incentives for property developers to build new homes and for buyers to acquire them. This has led to fewer developments and sales. Last week, rival housebuilding giant Vistry posted a profit drop of a third to £80m for the first half of the year, after issuing a string of profit warnings in recent months. It reported 6,800 home completions for the six months ending June 30, down from 7,792 in the previous year. Vistry cited sluggish demand from its affordable housing partners on the back of funding constraints and uncertainty ahead of the Chancellor's June Spending Review, but outlined its hopes that the Government's £39bn affordable homes strategy will boost its business. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
The Herald Scotland
2 days ago
- Business
- The Herald Scotland
Shares in housebuilder Barratt Redrow fall as costs soar
That came as the company highlighted the impact on demand for new homes from 'consumer caution and mortgage rates not falling as quickly as hoped'. Housing completions for the 52 weeks ended June 29 were 'slightly below' the guided range at 16,565, which the company said was 'mainly due to the impact of fewer international and investor completions than expected in our London businesses'. It informed the City that profits for the full year will be 10% lower than the £712m expected by the market because of £98 million of 'legacy property related costs'. The £98m includes remediation and associated costs arising from fire safety related issues in four buildings in its southern region, which were completed in 2002. Additional costs of around £18m relate to new issues identified at a large development in London. 'We believe in Glasgow': Developer gives city huge vote of confidence New Scots tourism figures 'tell only part of the story' The combination of a cut to profit expectations and acknowledgement of market fragility proved to be difficult for some investors to swallow, and caused shares in the builder to lose more than 8% of their value. Dan Coatsworth, investment analyst at AJ Bell, said the 'shocking update' from Barratt Redrow had overridden any thought that the housebuilding sector would be boosted by Ms Reeves' plans to get Britain building more homes. He said: 'Shares in the housebuilding sector would normally motor on this type of news, but not today. The sector is firmly in the red after a shocking update from Barratt Redrow whose full-year results reveal home completions below expectations. It says consumers remain cautious and mortgage rates are not falling as quickly as hoped. The general tone is one of frustration and a lack of confidence in the near term, which has soured sentiment across the housebuilding sector. If one of the biggest housebuilders in the country is flagging headwinds, it doesn't give much hope to the others.' But it was not all doom and gloom in Barratt Redrow's update to the stock market. The company declared the integration of Redrow following its £2.5 billion by Barratt was progressing well and expected to deliver greater cost savings than initially expected. It said around £69m of cost synergies have been confirmed and that it was 'well on the way to achieving our previously upgraded cost synergy target of at least £100m'. 'What we are seeing right now are once-in-a-generation challenges' Energy chief's price pledge as £300m Glasgow district heating scheme takes shape 'We estimate the cost synergies crystallised within FY25 performance totalled c. £15m, ahead of our October 2024 target of c. £10m,' the company said. 'We anticipate c. £45m of incremental cost synergies will be crystallised in our FY26 performance.' Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said these cost savings 'helped underlying pre-tax profits to land in line with market expectations of around £583m, despite home completions not quite reaching as high as hoped'. Mr Chiekrie noted: 'Sales rates are moving in the right direction and the integration of the Barratt and Redrow businesses has continued at pace. Trimming the fat on overlapping operations between the two businesses delivered £69m of cost savings last year, with the group aiming for that figure to reach £100m annually. 'The group has built 16,565 new homes over the year, slightly below the bottom end of its guidance range due to softer-than-expected demand for its London homes. Looking ahead, new building safety charges are set to bring a £98m hit to profits this year, so pre-tax profits are likely to fall around 10% short of current market expectations of £712m. This disappointment has seen the share price fall by double digits in early trading. Despite this, the balance sheet remains in great shape.' David Thomas, chief executive of Barratt Redrow, described the company's performance over the year as 'solid', with adjusted profits in line with expectations despite completions falling short of guidance and the benefits of the Redrow deal coming to fruition 'ahead of schedule'. Mr Thomas said: 'Although demand during the year has been impacted by consumer caution and mortgage rates not falling as quickly as hoped, there remains a long-term structural under-supply of housing in this country. Our increased scale, three market-leading brands and strong land pipeline put us in a unique position to rapidly accelerate volume delivery as consumer confidence strengthens, and the benefits of planning reform materialise at a local level. 'We remain confident in our medium-term ambition to deliver 22,000 high-quality homes a year, and in the long-term demand for our high-quality homes." Shares in Barratt Redrow closed down 9.4% at 377.3p.
