Barratt Developments is set to acquire its competitor Redrow in a deal valued at £2.5bn.
As a result, this deal now makes the new entity the largest homebuilder in the UK.
Newspage asked property experts what the implications for the UK housing market of this acquisition could be, whether it could see more homes built and whether reduced competition could have a negative impact for the consumer.
Reaction:
Justin Moy, managing director at EHF Mortgages:
“This is an interesting move by two major builders.
“It may be read as a sign of recovery in the housebuilding sector or, equally, an indication of the tough conditions caused by higher mortgage costs and inflation.
“With the continued lack of supply of housing across the UK, the merger shouldn’t affect the wider plans of trying to meet that shortfall, but the mix of property built may need to be skewed towards smaller, more affordable options.”
Darryl Dhoffer, adviser at The Mortgage Expert:
“The worry with this deal is that reduced competition could give the merged entity more control over pricing, which could potentially lead to higher prices for buyers.
“With fewer major players, there could also be less variety in house designs and features, and less incentive for innovation in the sector.
“Deals like this often involve redundancies to eliminate duplication, impacting employees in both companies, which I can see happening. Let’s hope this acquisition does not hinder the new build market but instead boosts it.”
Riz Malik, founder and director at R3 Mortgages:
“Barratt is looking to dominate the UK housebuilding market and the acquisition of Redrow will cement its status as the UK’s biggest developer.
“Given the resilience of UK property prices, they seem perfectly poised to benefit from revived demand for new homes.”
Akhil Mair, director at Our Mortgage Broker:
“The acquisition of Redrow by Barratt Developments is incredibly promising for the UK housing market.
“This strategic move not only cements Barratt’s position as one of the largest homebuilders in the UK but also sets a strong foundation for enhanced quality, service and sustainability in the industry.
“The deal signifies a significant step towards addressing the housing shortage in the UK. With both companies combining their expertise and resources, we can anticipate a more efficient delivery of much-needed homes across the country.
“The commitment to accelerate homebuilding reflects a positive outlook for meeting the growing demand for housing in the UK.
“While some may raise concerns about limited competition, it’s important to note that healthy competition can still thrive in the market, even with the consolidation of developers.
“The focus should remain on delivering homes at reasonable prices while maintaining quality standards, and this merger presents an opportunity for that.”
