Housebuilders suffer worst run of profit warnings since financial crisis

Britain’s housebuilders are issuing profit warnings at the same rate as during the depths of the 2008 financial crisis as the sector buckles under the strain of tax rises and faltering buyer confidence.

Builders and construction companies on the London Stock Exchange issued eight profit warnings in the first half of 2026, including six in the second quarter alone, according to an audit by EY’s strategy consulting division.

Barring the pandemic-hit first half of 2020, it marks the worst total recorded in the first six months of a year since 2008.

Tim Vance, a partner at EY-Parthenon’s UK and Ireland arm, said that higher energy and building costs, weaker buyer confidence and “fading expectations” of further interest rate cuts had all taken their toll on the sector.

Planning delays, regulatory complexity, environmental constraints and persistent skills shortages have also weighed on activity.

“The market conditions right now and in the near term are really challenging,” said Mr Vance.

The wave of profit warnings comes as homebuilders warn that strict regulations, lengthy council planning disputes and affordable home targets are making it unprofitable to build new homes.

Rob Perrins, the boss of Berkeley Group, warned earlier this year that it was becoming impossible to build in London because of high taxes and red tape.

He said: “You can’t keep increasing taxation on fewer and fewer houses.”

Housebuilding in London has fallen sharply as high costs mean construction companies are struggling to meet even watered-down targets for affordable housing.

The 2017 Grenfell fire, which killed 72 people, triggered a new wave of building safety regulations and costs.

From April 2022, large builders have had to pay a residential property developer tax to fund the country’s cladding remediation bill.

In October this year, developers will also have to pay the building safety levy, another tax to pay for cladding remediation. Environmental rules have also tightened, piling on further costs.

Those that have cut their profit guidance so far this year include Crest Nicholson, Berkeley Group and Taylor Wimpey. Last week, Crest Nicholson said it swung to a loss for the first half of its financial year.

Several companies have also scaled back plans to buy land for construction projects to offset weak demand and boost their cash reserves. Vistry, which is one of the builders that has done this, has been cutting house prices at some of its sites to bolster sales.

“Questions around liquidity, covenant headroom and restructuring options will move further up the sector agenda,” Mr Vance predicted as he said balance sheet strength was “becoming an increasingly important differentiator”.

Crest Nicholson is attempting to secure new terms attached to its debt. It has secured a temporary waiver to terms while discussions are ongoing.

The cost of building a new home has risen by £76,000 since 2020 according to the Home Builders Federation. Costs have been pushed up by thousands of pounds in extra taxes such as the building safety levy, as well as inflation in labour and building material costs.

Listed housebuilders have issued 47 profit warnings since the start of 2020, according to EY’s research, almost double the 27 recorded during the prior 13 years combined.

More broadly, UK-listed businesses issued 59 profit warnings in the second quarter of 2026, up from 55 in the preceding three months. Almost a fifth of all UK-listed businesses have issued at least one profit warning in the past 12 months.

More than half of companies that issued warnings in the second quarter blamed policy changes and geopolitical uncertainty, the biggest proportion EY has recorded since it began tracking the data more than 25 years ago. Two in five cited the impact of the Iran war.