Redrow to shut two divisions as it launches restructure

Listed housebuilder Redrow is to shut two of its 14 regional divisions as part of a restructure launched to “manage overhead” as it prepares to reduce output in the weakening market.

The £2.14bn turnover firm is closing its Southern and Thames Valley divisions, based in Crawley and Oxford respectively, but said it will continue to serve these areas from neighbouring divisions.

Chief executive Matthew Pratt told staff in a group email that jobs will also go “across the business” as the firm restructures to build fewer homes in the year ahead.

The move comes amid deepening gloom in the industry over the state of the housebuilding sector, given recent rises in average mortgage rates to a 15-year high and continued paralysis in local authority planning.

Redrow, which employs around 2,250 staff, declined to comment when asked how many roles were likely to be affected by the restructure and closure of the Thames Valley and Southern divisions, but LBC has reported that “at least 100” people are at risk of losing their jobs.

The staff email from Redrow’s chief executive, seen by Building’s sistder title Housing Today, says the restructure has been launched because the “current economic climate with higher interest rates and the cost of living crisis has had a negative impact on the homebuilding industry”.

It continues: “Accordingly, we have had to limit our investment in land which will inevitably reduce our future output and as a result the company needs to manage its overhead to reflect this reduced activity.

“As a board we have had to make the difficult decision to close our South and Thames Valley divisions, and there will also be wider proposed reductions in headcount across the business.”

Matthew Pratt added that the business, which built 5,715 homes last year, will formally consult with affected staff to find ways to mitigate the impact of its proposals and that the firm “fully appreciate[s] how difficult this is and we will ensure we deal with the changes in a fair, sensitive, and timely manner”.

Redrow’s Southern business, covering Surrey and East and West Sussex, only officially opened in June last year, with Redrow saying in last year’s results published in September 2022 that the division had been “active in the land market for some time” and was at that time “expected to make a positive contribution to profits in the current [2022/23] financial year”.

A spokesperson for Redrow said that Thames Valley and Southern developments will now be managed from other offices. They said: “Our developments are unaffected by the proposed changes we have briefed to colleagues this week.

 >> See also Steve Morgan interview: ‘It’s like the government wants to destroy the industry’

“We are proposing to close the administrative offices of our Southern and Thames Valley divisions, and make a small reduction in staffing across some of our other teams. The vast majority of colleagues will be unaffected and there will be no impact on customers.

“We appreciate how difficult this is for those colleagues that are affected and we are supporting them throughout this process.”

Matthew Pratt said at the firm’s half year results in February that the business faced a “challenging year” given the impact of the “disastrous” mini budget in September. However, at the time he said that trading in 2023 had begun better than anticipated, although those comments were prior to recent renewed steep rises in mortgage rates seen in the last couple of months.

Housebuilder Barratt last week predicted a drop of up to 23% in completions next year given the state of the market, while Weston Homes founder Bob Weston this week said the combination of market and planning woes could drive build rates down by 40% over the next year.

A spokesperson for the Home Builders Federation, responding to the news from Redrow, said: “The government’s approach to house building and the downturn in the economy is having an inevitable impact on the industry, and knock on social and economic implications.

“An anti-development approach on planning, failure to address the nutrients issue and the absence, for the first time in decades, of any support for first time buyers is seeing investment cut and fewer new homes built. Companies are having to take tough decisions for the long-term prospects of their businesses.”