Barratt Developments welcomes new Labour government targets

Barratt Developments' (BDEV) full-year trading update was delivered during a week in which the UK’s new chancellor, Rachel Reeves, reintroduced compulsory housebuilding targets as part of a wider push to stimulate growth in the economy. In her maiden speech as chancellor, Reeves also said she would overhaul planning restrictions with a particular emphasis on brownfield sites, and what is described as the “grey belt”, ergo areas within the green belt deemed 'poor quality'. That’s suitably subjective, but a potential stumbling block is that Labour says the grey belt developments must offer 50 per cent affordable housing, including dwellings that are let at least 20 per cent below local market rents.

It’s always a tricky proposition to convince developers about the potential viability of housing schemes that fall outside of normal market dynamics, particularly given that inflation has pushed up industry costs markedly over the past three years. The Barratt update indicates that pressures on this score are easing as the housebuilder experienced total build cost inflation of approximately 5 per cent through to its June year-end. It now expects total build costs to be “broadly flat” in FY2025.