Is Vistry the canary in the coalmine?
The Sunday Times reported recently that housebuilder Vistry Group had halted payments to its suppliers, as its leadership struggled with a severe cash squeeze. An important part of the government’s push to build more housing, Vistry’s precarious position offers a stark window into not just its own internal failings, but also into the state of housebuilding as a whole, and the broader issues plaguing the UK housing sector.
A Chequered History
Vistry was formed through Bovis Homes’ acquisitions of Galliford Try’s housing division and Countryside Properties. Now a FTSE 250 company, Vistry builds between 15,500 and 17,500 homes annually. However, its business is heavily skewed toward the public sector, where it is responsible for about 1 in 7 social homes built in the UK – only around 25% of its homes are sold on the open market.
Though its position in the industry is prominent, Bovis/Vistry has a chequered past. In the late 2010s, poor build quality drove disgruntled homebuyers to form the “Bovis Homes Victim Group”. Bovis became the only national housebuilding firm to be downgraded to a two-star rating by the Home Builders Federation, and became infamous for the glacial pace at which it settled outstanding invoices. In February 2024, Vistry paid £12.8m to the government to settle a Competition and Markets Authority investigation into anti-competitive behaviour.
Governance Failures and Profit Warnings
Vistry’s problems extended into management too – CEO Greg Fitzgerald appointed himself chairman, flying in the face of the UK Corporate Governance Code, and cemented his hold over the group by abolishing the post of Chief Operating Officer. This level of control, however, did not prevent the under-reporting of costs and the overstatement of profits. The company has issued a series of profit warnings, and suffered a massive £165m hit, due to “insufficient management capability, non-compliant commercial forecasting processes and poor divisional culture.” The opposition housing secretary, Paul Holmes, has questioned the viability of the company itself.
Despite these red flags, Vistry is one of only two private sector developers that has been designated a “strategic partner plus” by the government in its attempt to build 1.5m houses by 2029. Vistry’s state begs the question of how successful Labour’s housebuilding push will be.
A Capital-Intensive Business
Many of Vistry’s struggles reflect the capital-intensive nature of housebuilding. Vistry has nearly £4bn tied up in various long-term projects with its “partners”, mainly local governments and the private rented sector. These public partners and the not-for-profit sector have long lead times, which further tie up capital. Vistry says more delays were encountered by these partners due to uncertainties around last June’s Spending Review and the Autumn Budget. Consequently, Vistry’s return on capital employed hovers around 2.7% – a strikingly low figure.
With consumer confidence at a low ebb, particularly around London, sales were already being hit even before the cash crisis noted by The Sunday Times. In an effort to raise cash, Vistry has been forced to increase discounts on new houses for sale and to enter sale-and-leaseback transactions with private equity – never a sign of a healthy company.
A wider malaise?
Difficulties extend beyond one firm. Only about 200,000 dwellings were completed in the UK in 2025, well short of the rate needed to hit the 1.5m target by 2029. London only managed to build 5,981 new homes last year against a target of 88,000. High construction costs, slow and cumbersome planning processes, lengthy environmental and safety assessments, and NIMBYism all contribute to the overall lack of activity.
Much of the difficulty is self-inflicted by regulation – large green belts around our big cities, plus areas of outstanding natural beauty or scientific interest, make it particularly difficult to build where people might want to work. Much of the area north of London, particularly around the Wash, is susceptible to flooding and is therefore also difficult to build on.
The government’s answer to the slowdown in house building is to turn to its old friend: regulation. Buildings are being encouraged to have “green” roofs to boost biodiversity, there are new regulations for high-rise buildings, new regulations on land options and new regulations for building on “grey belt” land.
Although the present UK government is still committed to its 1.5m housing target, there appears to be a lack of commercial awareness. The Housing Minister, Richard Pennycook, believes that housebuilders are “overly speculative” and are deliberately slowing down sales in order to maximise “short-term return on investment rather than volume”. This arguably misses the point that selling more, quickly, even at a lower margin, can deliver a better return on investment. Vistry would love to realise some of the £4bn of capital it has tied up, but it cannot if red tape holds up development and consumers are not prepared to buy because they are worried about the tax burden. The government bemoans the disappearance of small and medium housebuilders, but the truth may be that only very large groups can afford to finance the calcified bureaucracy and planning delays present in the UK today. Even the large, listed groups favoured by the government are plagued with low returns and liquidity issues. Vistry’s troubles are not an outlier, but a warning: Britain’s housing system is failing.
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