Housebuilder MJ Gleeson has warned of a 15-20 per cent hit to its profit this year due to a slow housing market recovery and the collapse of a land sale in Yorkshire.
The company told markets this morning that the pace of housing market recovery in the UK has “not been sufficient” to offset the impact of higher build costs, flat selling prices, and several bulk sale transactions.
Gleeson said its gross margin for the year would be around one per cent lower than it had expected, putting operating profit 15-20 per cent below current expectations.
While materials cost inflation has been moderating since peaking in 2022, labour cost inflation continues to rise, driven by increases to employers’ National Insurance contributions and the National Living Wage.
The company added that the fall-through of a land disposal in East Yorkshire had further impacted profit.
“The board’s expectation that Gleeson Homes would deliver an overall operating profit in line with market expectations included the profit contribution [of the sale]… It is now not expected that this disposal will proceed,” the company said.
Last year, Gleeson reported revenue up 5.2 per cent, from £328.3m to £345.3m, although profit before tax fell by 21.3 per cent to £24.9m.
Looking ahead, Gleeson said planning delays will further affect the business in 2026, with its gross margin for next year expected to be around one per cent lower than market expectations.
While the UK government is in the process of reforming the planning system, around half of projects are currently facing delays.
