UK's Largest Housebuilder Barratt Redrow to Cut Land Purchases Amid Geopolitical Uncertainty

Barratt Redrow, the UK's largest housebuilder, has announced plans to dramatically cut back on buying new land, citing the impact of geopolitical events in the Middle East. This move is expected to put additional pressure on Labour's ambitious target of building 1.5m new homes over five years.

The company intends to approve between 7,000 and 9,000 plots of land for purchase in its current financial year, significantly lower than its previous guidance of 10,000 to 12,000 plots. This reduction follows an already cautious approach to land buying this year.

The decision to curtail land buying plans has been attributed to geopolitical uncertainty, which is expected to impact mortgage rates and build costs. As a result, Barratt Redrow now expects to spend between £700m and £900m on land this year, down from its previous guidance of £800m to £900m.

This move comes after another major UK housebuilder, Berkeley Group, announced plans to stop buying new land and implement a hiring freeze due to similar concerns over geopolitical volatility.

Labour's housebuilding target of 1.5m new homes over five years has already faced challenges, with only 116,000 new homes started in England in the first year of Labour's term, falling short of the required 300,000 annually. The Centre for Policy Studies thinktank has highlighted the significant gap between the current rate of housebuilding and the target.

Oli Creasey, head of property research at Quilter Cheviot, noted that Barratt Redrow's reduced land purchase guidance, combined with Berkeley Group's decision to slow land purchases, raises concerns about the housebuilding sector's outlook.

In related news, Barratt Redrow has confirmed its £100m target for cost cuts following its £2.5bn takeover of Redrow in 2024, with £20m in savings achieved last year and £50m expected this year.