(Bloomberg) -- Barratt Developments Plc is preparing to ramp up new homebuilding following its acquisition of rival Redrow Plc and the overhaul of the planning system by the UK’s new Labour government.
The homebuilder said it expects the combined group to deliver more new properties than the two businesses would on a stand-alone basis, even as its current output slumped, according to a statement Wednesday.
“Whilst the housing market remains subdued due to affordability constraints, we welcome the government’s proposed reforms of the planning system as key to both unlocking economic growth and tackling the chronic undersupply of new homes,” Chief Executive Officer David Thomas said in the statement. “Underlying demand in the UK is strong.”
The government laid out proposals to boost development this summer, promising to restore mandatory local housebuilding targets that were ditched by the previous Conservative administration. While planning reforms will take time to implement, UK lenders are already preparing for an increase in development finance, if the plans come to fruition.
Barratt — which is the process of buying rival Redrow Plc for £2.5 billion — said it completed on 14,004 homes in the year through June, down 18.6% from a year earlier. There are signs of an uptick in more recent trading, with net private reservation rates in July and August at 0.58, up from 0.42 during 2024.
Still, the number of new homes completed in England in the first quarter fell to the lowest since 2020’s first Covid lockdown, reflecting developer caution in the face of higher interest rates, according to the Office for National Statistics.
Barratt said it is bolstering sales with more incentives and offloading more properties through bulk deals to rental investors. The rate of price declines on its private reservations slowed to 2.7% in the second half from 5.6% in the previous six months.
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