Barratt Developments plc, one of Britain’s biggest housebuilders, has warned it could build 20% fewer homes this year compared to what it achieved during its previous financial year up to June. Barratt expects an icy housing market and so they have taken steps to protect themselves by cutting construction production.
Britain’s property market is under strain not just from rising interest rates; local government policies have created uncertainty for both developers and homebuyers. Examples include new “nutrient neutral” planning requirements being enforced in some authorities, energy efficiency upgrades being introduced gradually across the board, and Biodiversity Net Gain requirements that must be delivered.
Taken together, these factors present a real obstacle for House Builders Federation members. According to them, their industry faces a host of obstacles which are holding it back including an absence of clarity from central government on key issues.
HBF reports it is becoming clearer that the 300,000 home per year target set out in the Conservative manifesto will be downgraded significantly and this shift reflected in ministers’ policy approaches which appear less pro development and more focused on quality of places.
Barratt remains competitive despite this backdrop; selling one home per site every week during the first five months of 2016, surpassing last year and long-term average sales volumes. Furthermore, its Lakeside Grange scheme in Weybridge received the Design Quality Award at this year’s National New Homes Awards.
Barratt remains well-positioned despite the effects of a weak economy and rising interest rates; its balance sheet remains strong to support it through challenging times; shareholders simply need to remain patient if profits don’t improve instantly.
Sir Lawrie Barratt began the company in 1953 after being unable to afford the home he desired and so decided to build it himself for just PS1,750 – setting off what is now one of the largest residential developers in England and Scotland with sites across England and Scotland. Sir Lawrie died at his Corbridge, Northumberland home in December 2012 as the father of two sons; his family currently owns this FTSE 100 Index-listed business.
