Barratt backs off post-Brexit purchases

Barratt Developments, the UK’s largest housebuilder by output, has decided to put land-buying commitments on hold where possible and evaluate recent purchases following the Brexit vote.

David Thomas, chief executive, said the group was reviewing decisions on land acquisitions made during April to June and would “defer land contracts where we can” until conditions become clearer.

“The biggest decisions we make are about land expenditure and we expect to be very, very focused about every land decision,” he said.

Barratt has doubled the number of homes it builds each year in the past five years, but the land review points to the potential for a more conservative approach after the EU referendum — although Mr Thomas said market conditions would become clearer in September, when it and rival housebuilders report results.

The group said on Wednesday it was set to make record profits for the full year but saw its shares sink as investors received no guidance on post-referendum trading.

Barratt expects to announce a 20 per cent jump in pre-tax profit to £680m for the year to the end of June, but declined to comment on trading levels since the June 23 vote to leave the EU, saying it was too soon to assess the market.

The FTSE 100 group’s shares sank by more than 4 per cent in early trading before recovering to close down 1 per cent. They have shed more than 29 per cent of their value since the referendum.

Analysts at Deutsche Bank said: “With uncertainty over the outlook for the UK and housebuilding post-Brexit we believe the market will be blinkered, focusing only on trading in the ‘new world’.”

Brandon Lewis, housing minister, and Greg Clark, communities secretary, met with housebuilders on June 30 in the wake of the landmark vote to discuss any risks to construction in the light of the housing shortage.

The sector has received extensive support through the government’s Help to Buy programme, which provides government-backed loans for first-time homebuyers so they can buy with smaller deposits.

Mr Thomas said this would help to support housebuilders even if sentiment turns negative in the market for second-hand homes. Surveyors pointed to signs of a slowdown in the market for existing homes even before the vote.

“[Help to Buy is] an incredible consumer offer that doesn’t exist in the second-hand market,” he said.

Barratt increased forward sales by 18.7 per cent to £1.6bn during the 12 months to the end of June, and completed 5.3 per cent more homes, bringing the total to 17,319.

Its average selling price rose 10.6 per cent to £260,000 during the year, while reservations per outlet per week were up 7.8 per cent to 0.69.

Barratt would also keep a tight rein on capital expenditure, Mr Thomas added. The group ended the financial year with higher-than-expected net cash of £590m.

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