Housebuilders Amplify Calls for Government Assistance as Market Challenges Persist
Two prominent UK housebuilders, Barratt Redrow and MJ Gleeson, have added their voices to a growing chorus within the construction sector pleading for governmental intervention. This appeal comes amidst a backdrop of mixed financial results, where modest gains are overshadowed by significant concerns over future growth and profitability.
Barratt Redrow Reports Profit Dip Despite Integration Progress
FTSE 100 listed Barratt Redrow has disclosed a complex financial picture for the first half of the fiscal year. The company successfully completed 7,444 homes, marking a 4.7 per cent increase compared to the previous year. Statutory profit also saw a notable rise to £156.2 million. However, profit before tax experienced a sharp decline of 13.6 per cent, settling at £199.9 million.
The firm attributes this downturn primarily to the substantial costs associated with integrating Redrow into its operations, including comprehensive property value assessments. Despite these financial headwinds, Barratt Redrow reports strong progress in the merger process, which is now nearing completion. The group maintains an ambitious target, aiming to deliver between 17,200 and 17,800 homes by the financial year's end.
Chief Executive David Thomas emphasised the company's solid foundation for future growth, citing a robust land bank and forward sales. Nevertheless, he issued a clear warning: "While progress made on planning reform is encouraging, a stable and supportive demand environment is essential to enable increased delivery at scale across the sector." Following this statement, the company's share price fell by 6.9 per cent in early trading.
MJ Gleeson Navigates a Subdued Market with Cautious Optimism
Fellow housebuilder MJ Gleeson, a constituent of the FTSE 250, also presented a set of contrasting results. The company reported a robust performance within a challenging market, with group revenue climbing 9.6 per cent to £173.1 million. This growth was largely driven by its Gleeson Homes division, which saw a 7.7 per cent revenue increase.
Despite this top-line growth, profit before tax plummeted by 52.8 per cent to £1.7 million. On a positive note, the company's forward order book expanded significantly by 64 per cent, comprising 978 plots. CEO Graham Prothero expressed caution regarding the full-year outlook, stating that a strong Spring selling season is "fundamental" to meeting current market expectations.
Prothero highlighted several persistent pressures: "The bulk market has softened further... Margins continue to be pressured as net selling price increases are outpaced by build costs, and we experience increasing regulatory and tax headwinds." Reflecting these concerns, MJ Gleeson's share price dropped 8.8 per cent.
A Sector-Wide Chorus for Support
The pleas from Barratt Redrow and MJ Gleeson are not isolated. The latter part of 2025 witnessed a series of turbulent results from major housebuilders, including Persimmon, Taylor Wimpey, and Vistry. While many reported increases in home completions, these achievements were consistently tempered by warnings about future growth constraints without sector-wide assistance.
Common themes across these warnings include:
- Muted demand, particularly from first-time buyers.
- Affordability constraints despite reductions in mortgage rates.
- A decline in bulk sales within order books.
- Uncertainty stemming from government policy, such as the Autumn Budget.
Understanding the Gloom: A Perfect Storm of Pressures
While estate agents may be observing a gradual recovery in house prices, builders are grappling with a multifaceted crisis. The industry faces a confluence of economic, regulatory, and market challenges that threaten its viability and growth.
Key factors contributing to this pessimistic outlook include:
- Regulatory and Tax Burdens: Legislation such as the Residential Property Developer Tax for cladding remediation and the Building Safety Act has added thousands to construction costs. The impending Building Safety Levy, due in October 2026, and changes to landfill tax are expected to exacerbate this financial strain.
- Planning System Delays: Despite recent reforms, builders continue to report significant delays in planning applications, often due to local council blockades. Smaller developers are disproportionately affected, with delays threatening project viability.
- Skills Shortages and Inflation: Persistent shortages of skilled tradespeople, including bricklayers and joiners, are driving up labour costs. Concurrently, build cost inflation continues to outpace increases in selling prices, squeezing margins.
Analyst Max Hayes of Cavendish summarised the dilemma, noting that improving mortgage availability may not be sufficient to offset the heavy regulatory and tax headwinds combined with persistent cost inflation.
The consensus across the sector is clear: the upcoming Spring selling season will be a critical juncture. Its performance will likely determine whether housebuilders can meet their annual targets or if further distress lies ahead without substantive government and industry support to stabilise the market.
