Jobs to go at Barratt Redrow as firm looks to save £90m

Barratt Redrow, the newly-formed housebuilding giant, is set to make job cuts after revealing it will close nine divisional offices.

The firm says the move will save it in the region of £90m over the next four years and will leave it with a new structure made up of 32 regional offices.

Leicestershire housing giant Barratt finalised its £2.5bn acquisition of North West housebuilder Redrow after receiving approval from the Competition and Markets Authority (CMA) earlier this month.

In a trading update issued this morning (October 23), Barratt Redrow said it has “conducted a detailed review” of its geographic coverage and offices to “optimise the divisional network” of the combined group.

Barratt Redrow announced earlier this week that it has started consultation on the closure of five of the nine offices it wants to close.

David Thomas, chief executive, said: “Whilst customer demand continues to be sensitive to the wider economy, we are beginning to see more stable market conditions with increased mortgage availability and affordability. It will take some time for customer confidence to fully recover from the macroeconomic headwinds faced over the past two years, but we are encouraged by the solid trading we have experienced over recent weeks.

“This is an exciting new chapter for our business. Barratt Redrow is uniquely well-positioned to meet the need for new homes of all tenures across the country. We have superior scale, with a differentiated multi brand offering that can be deployed across our strong combined land portfolio. We begin this journey with a strong balance sheet, a solid forward sales position and the ability to add significant value through cost and revenue synergies. We look forward with confidence to delivering a smooth and efficient integration process, and to capturing the enhanced growth opportunities ahead of us.”

Russ Mould, investment director at Manchester investment platform, AJ Bell, said: “Newly-merged housebuilder Barratt Redrow was always going to look to make savings as part of its tie-up so it’s not a surprise to see the company unveil a round of cost cutting – although the market has still given the business some credit for the news. 

“The company is cutting back on central and support functions where there will have undoubtedly been some duplication. The savings look meaningful but not so unrealistically high that management are setting themselves up to fail or mindlessly slashing costs with a potential knock-on effect on business performance.”

He added: “The company has plans to increase the volume of homes built from this year’s total, which is somewhat short of what had been expected, and it will hope the recent stabilisation in the market and improvement in mortgage availability and affordability persists. 

“Consolidation in the sector was expected after housebuilders were hit by a wave of rising interest rates, sluggish house prices and rising costs. Shareholders in the new Barratt Redrow entity will hope the enlarged group has the best foundations for an eventual recovery to the levels of profit and cash generation enjoyed before the sharp rate increases of recent years.”