Barratt Developments has notified about 5% of its London staff that they may lose their jobs as the company retreats from building expensive apartments in the centre of the UK capital.
Britain’s second-biggest housebuilder by market value is weighing around 20 job cuts in London, according to people with knowledge of the plans.
Affected employees have been placed on redundancy consultation, but no firm decisions have been made and there’s no certainty over the total number of positions to be eliminated, according to the sources.
The potential losses come as central London housing is mired in its longest slump in decades.
Barratt’s private completions in the high-end market dived more than 64% in the year through June, leaving the firm with just 18 homes to sell in the center, it said last month.
By contrast, the number of outer London sales — which fetched an average 70% less than those in the center -- grew almost 40%.
The job consultations are focused on a single Barratt London division and are not solely a result of the shift out of central London, one source said.
A long period of central London home prices surging faster than wages ended in 2014 thanks to tax hikes on luxury home buyers, followed by further increases for landlords and second-home purchasers in 2016.
Shortly after, the country’s shock Brexit vote introduced severe political and economic uncertainty that the market has since struggled to shake off.
Still, the UK government’s Help to Buy programme has propped up demand for cheaper homes that qualify for its interest-free loans.
That’s encouraged home builders including Barratt to shift the focus from London to the city’s outer reaches, where prices are lower.
While Barratt’s completions across all of London rose 3.6% in the year through June, its private sales in the capital still declined by almost 14% in the period.
Across Britain, house prices, that almost flat-lined ahead of Brexit, grew a bit more quickly in October, a survey from mortgage lender Nationwide showed.
House prices rose by 0.4% on the year, Nationwide said, the 11th month in a row that annual price growth remained below 1%.
Nationwide’s chief economist Robert Gardner said average prices rose by £800 (€925) over the last 12 months, a sharp slowing compared with the 12 months to October 2016, just after the Brexit referendum, when prices jumped by £9,100 (€10,560).
Bloomberg and Reuters