Barratt Redrow cuts land buying as it warns Iran war will push up building costs
Barratt Redrow has warned that higher energy costs will bump up building material costs after cutting its land buying plans for the year amid a 'less certain backdrop'. The housebuilder said it had faced 'limited impact' from the war and was on track to deliver home completions of between 17,200 and 17,800 in the full year to June.While build cost inflation for the year is expected to average 2 per cent across the year - creeping to 3 per cent in the second half - Barratt expects it to rise further in the 2027 fiscal year amid 'heightened macroeconomic uncertainty.' The group said it would have 'better visibility' on longer-term build cost inflation once it publishes its next trading update in July. Higher oil prices since the start of the war at the end of February have sent fuel and energy costs surging around the world, which is affecting the cost of raw goods and materials. Costs: Housebuilder Barratt Redrow has warned that higher energy costs looked set to bump up building material costsBut Barratt Redrow said it was still 'well placed' to secure 'the most competitive pricing' for its building materials. It said it would 'switch from traditional to timber frame construction', through Oregon, its timber frame business, should traditional construction unput costs become too high. It said it completed 3,274 homes in the period, down from 3,717 over the same period a year ago. Barratt Redrow shares rose 2.13 per cent or 5.50p to 263.80p on Wednesday morning, having fallen 38 per cent in the past year. However, the housebuilder reduced its land buying guidance again, cutting it by a further 3,000 plots. In the 13-week period from 29 December 2025 to 29 March 2026, Barratt Redrow approved 2,465 plots for purchase across 14 sites, down from 7,574 plots across 37 sites the previous year. The group has been taking a more 'disciplined' approach to land purchases for some time. It said on Wednesday: 'Now, with a less certain backdrop, given recent geopolitical events and their likely impact on mortgage rates and build cost inflation, we are being even more selective.'The group now anticipates total land approvals for the financial year of between 7,000 and 9,000 plots, below its previous guidance range of between 10,000 and 12,000 plots. This looks set to be secured with a spend of between £700million and £800million, down from its previous guidance range of between £800million and £900million. It comes just weeks after Berkeley halted land buying, blaming the 'continuous increase in the tax and regulatory burden'. Richard Hunter, head of markets at Interactive Investor, said: '[Barratt] shares have fallen by 38 per cent over the last year, very much missing out on the broader revival whereby the wider FTSE 100 rose by 29 per cent over that period, and by 66 per cent over the last five years. 'Of course, this leaves an undemanding valuation and the initial share price reaction to the update suggests some underlying support. 'It seems that investors retain a conviction to look through the more immediate challenges and concentrate on the possibilities of a recovery for the economic cycle, with the market consensus of the shares as a strong buy very much reflecting the group’s prospects as a longer-term play.'DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you
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Barratt Redrow cuts land buying as it warns Iran war will push up building costs
