Bellway holds subcontractor rates as build costs climb

By Elena Vasquez

Bellway has refused to raise agreed rates with subcontractors despite mounting price increase requests, even as it forecasts build cost inflation of 3 to 4% next year. The housebuilder expects that pressure to trim its output in 2027 to between 9,000 and 9,400 homes, down from the current 9,695.

Chief Executive Jason Honeyman set out the mechanics in the company's latest results. Build cost inflation ran at low single-digit levels in the first half of the financial year, then accelerated in the second half.

Honeyman said: "Build cost inflation was at low single-digit levels during the first half of the financial year but increased in the second half, principally reflecting greater pressure on material and energy costs amid heightened geopolitical and supply chain uncertainty."

How is Bellway holding the line on rates?

Suppliers and subcontractors have asked for more money. Bellway has pushed back.

Honeyman said: "The Group has received price increase requests from suppliers and subcontractors but has continued to negotiate robustly, limiting the impact on agreed rates."

The supply side, at least, isn't the problem. Product availability across the group is currently good, and Honeyman said procurement arrangements "retain flexibility to benefit from any reduction in input costs." In plain terms: if costs fall, Bellway has structured its contracts to capture the savings.

What do the numbers show?

The results cover the year ended July 31, 2026, and they're strong at the top line.

• Average selling prices rose to £324,404 from £316,412 — roughly £8,000 more per home.
• Group revenue climbed to £3,162.2m from £2,782.8m, a rise of about £380m.
• Pre-tax profits increased to £270.2m from £221.9m, after absorbing £35.2m in legacy building safety provisions.

That profit figure carries a caveat worth noting. Bellway set aside £35.2m for legacy building safety work and still grew profit by nearly £50m year on year.

What's going back to shareholders?

Bellway intends to return a further £150m to shareholders in 2027 through a share buyback programme.

Honeyman framed the capital plans around discipline rather than expansion. He said: "Against a backdrop of near-term economic uncertainty, our priorities remain clear: allocating capital with discipline, maintaining a strong balance sheet with low gearing and investing selectively in land to support future growth."

The buyback is part of a bigger payout. Honeyman said: "The £150m FY27 share buyback programme announced today is expected to take total dividends and share buybacks across FY26 and FY27 to c.£450m, reflecting our financial strength, cash generation and commitment to delivering long-term shareholder value."

That works out to roughly £450m returned across two financial years, or about £225m per year.

What happens to volumes?

The volume picture runs opposite to the profit picture. While revenue and earnings climbed this year, the 3 to 4% build cost inflation Bellway expects next year is set to pull completions down by roughly 300 to 700 homes in 2027.

Honeyman argued the company is positioned to reverse that when conditions improve. He said: "Bellway has the financial strength, operational capability and land bank to respond as market conditions improve and increase the delivery of much-needed new homes over the medium term."

For subcontractors, the signal is blunt: Bellway is treating agreed rates as fixed and plans to keep negotiating hard into an inflationary 2027.