Government planning reforms creating hurdles, slowing down Bellway's construction progress
Bellway Bucks Trend as UK Housing Construction Slows
In the face of challenges plaguing the UK housing construction industry, Bellway, a leading housebuilder, has delivered a solid performance, bucking the trend of slowdowns and contractions.
The company reported a better-than-expected year, with total housing completions increasing by 14.3% to 8,749 homes in the year ended July 31, up from 7,654 in 2024. This growth was ahead of Bellway's expectations for the year.
The average selling price for homes built by Bellway also increased, reaching £316,000 in the same period, up from £307,909 in 2024. This rise in average selling price, coupled with the increased completions, is expected to drive a strong increase in profits for the year.
However, the UK housing construction process is currently experiencing significant delays. These delays are primarily linked to local councils adapting to new planning system requirements and the Building Safety Act framework. About 30,000 homes are reportedly delayed at Gateway 2 of the Building Safety Act process, where developers must demonstrate building safety compliance before construction can proceed.
The Building Safety Act 2022 continues to contribute to elongated pre-construction periods, repeat tendering, and more cautious subcontractor engagement. This is evident in specific trade slowdowns, such as curtain walling, which has declined due to new stricter design and competency requirements before external walls can be built.
These regulatory delays, combined with increased scrutiny on funding and risk, are leading to a marked contraction in UK housing construction activity and orders in 2025. New housing orders dropped 24.8% year-on-year in Q2 2025, with private housing orders falling 27.1% and public housing orders shrinking by 10%.
Despite these ongoing headwinds, Bellway enters the new financial year with a healthy forward order book and outlet opening program. The company's CEO, Jason Honeyman, stated that if market conditions remain stable, they are well-positioned to deliver further growth in 2026.
The government recently announced an overhaul of Britain's planning system, promising to bring "seismic change" to the country's construction process. Bellway, a FTSE 250 firm, expects these plans to help the industry "in the years ahead", but warns that the changes have caused delays to planning decisions due to local authorities taking time to adopt new local plans and the updated National Planning Policy Framework (NPPF).
Under Labour's reforms, the NPPF has been changed, introducing new mandatory housing targets, provisions for affordable housing, infrastructure, and green space. Bellway added that the government's "ambitious" housing targets must be complemented to help housebuyers.
The price-to-earnings ratio for housing in the UK is at its lowest in 20 years, making it difficult for Brits to get on the housing ladder without financial aid. Bellway's underlying operating margin is expected to approach 11 per cent in the current year, up from 10 per cent in 2024, signifying the company's resilience amidst industry challenges.
In conclusion, while the UK housing construction industry is facing significant challenges, Bellway's strong performance demonstrates the company's ability to adapt and thrive in adverse conditions. The government's planned reforms offer hope for future growth, but the industry will need to navigate the ongoing regulatory hurdles to realise this potential.
- Despite a slowdown in the UK housing-market due to delays in construction and regulatory hurdles, Bellway, a prominent real-estate company in the FTSE 250, demonstrated resilience by bucking the trend with a 14.3% increase in total housing completions in 2025.
- In finance and investing terms, Bellway's underlying operating margin is forecasted to reach around 11% in the current year, indicating their strong performance and potential for growth, even as other markets struggle.
- Amidst the contraction in housing construction activity and orders in 2025, Bellway enters the new financial year with a healthy forward order book and outlet opening program, positioning them for further growth if market conditions remain stable, as suggested by their CEO.
