The chief executive of Barratt Developments, Britain’s largest housebuilder, has called the UK planning system “ineffective” alongside revealing the value of the firm’s forward order book has dropped by over a third.
David Thomas also cautioned the group expects the backdrop “will continue to be difficult over the coming months”.
The industry has seen tough conditions throughout 2023, with demand dented by higher borrowing costs with mortgage bills soaring. The Help to Buy scheme being withdrawn has also made it tougher for many people to get on the property ladder.
Thomas told the Evening Standard: “A number of buyers, mainly first-time ones, have postponed purchase decisions. In London and the South East we have seen some of the biggest challenges, and affordability is a big factor in that.”
As at August 27, Barratt’s total forward order book stood at £2.4 billion (9,608 homes), down from £3.8 billion (14,058 homes) a year earlier.
The number of completed home sales in the year to June 30 declined 3.9% to 17,206, although revenue edged up 1% to £5.3 billion and pre-tax profits were 9.8% higher at £705.1 million.
Adjusted profit before tax, which strips out one off items, largely costs to do with cladding works, fell 16.2% to 884.3 million.
The company stuck with its July guidance of home completions for the year to June 2024 being between 13,250 and 14,250.
Thomas said it was a solid operational performance in a challenging environment, and added that Barratt is resilient with a strong balance sheet.
Thomas also used the update to flag that the FTSE 100 company has “experienced problems with the ineffective planning system over the past year”.
He added: “New developments are increasingly constrained by an ineffective planning system.”
He said there are a number of issues, including local authority planning departments being underfunded.