There is growing speculation that one of Britain’s largest housebuilders could be the subject of a takeover bid after it issued its third profit warning in a matter of months because of rising costs, raising speculation that it could.

Several reports suggest that Crest Nicholson could become a takeover target unless its fortunes improve

The Surrey-based firm will issue its full-year results next week, which are expected to expose the challenging year that housebuilders such as Crest Nicholson have faced amid soaring interest rates and a weak housing market.

Crest Nicholson said its latest profit warning was the result of a “comprehensive review” of increasing costs, including bills linked to a Surrey-based development site that contributed to its second profit downgrade in November.

The company told investors yesterday that surging costs linked to the Brightwells Yard regeneration scheme in Farnham, as well as other ongoing projects, would slash up to 18% of its adjusted profits, which are estimated to total around £41m for 2023.

The firm added that it will earmark £13m for potential legal costs linked to a fire at one of its low-rise apartment schemes in 2021. Shares were down 4.7% on Monday morning, making Crest Nicholson one of the biggest fallers on the FTSE 250.

The warning comes months after Crest Nicholson’s first profit downgrade in August, when it said it was likely to make £50m in profit for the financial year, compared with about £74m that it had expected back in June. It followed a sharp fall in sales of its new homes/

“It has been a tough year for Crest and, unfortunately for the group and its investors, the bad news continues,” the head of European housing and building materials for the investment bank RBC Capital Markets, Anthony Codling, said. “In our view if today’s trading update leads to further share price weakness it increases the chances that Crest may be viewed as an attractive acquisition for another housebuilder.”

However, Crest Nichsolson said a recent reduction in mortgage rates, which has helped lure more buyers on to the market, had offered hope that housing market conditions could improve in the near-term.

“Although it is too early to gauge customer behaviour, we have been encouraged by an increase in customer interest levels and inquiries this calendar year,” the housebuilder said.