The group had previously guided to EBIT profit of between £5m and £10m for the year.

It has also cut its completions forecast to 1,350-1,400 homes from 1,400-1,500 as affordability pressures and competitive pricing continue to hit sales.

The warning came as Crest revealed talks with lenders over amendments to its banking covenants are taking longer than expected.

The group said discussions remained constructive but now anticipated “some slippage” in the timetable for agreeing changes designed to ensure sufficient funding and liquidity.

In a trading update this morning Crest said that open-market trading has weakened sharply over the summer, with the net sales rate falling to 0.35 over the last six weeks from 0.48 in the first half and 0.55 during the same period last year.

Crest said pricing pressure remained particularly acute on bulk sales, while weaker completions and further net realisable value provisions on a small number of sites had also hit expected profitability.

Despite the profit downgrade, Crest said its cash optimisation programme was performing ahead of plan.

Year-end net debt is now expected to fall to £70m-£90m, around £30m better than previous guidance of £100m-£120m, helped by land disposals and a further material recovery linked to historic fire remediation.

Chief executive Martyn Clark said: “While the trading backdrop has remained difficult through the summer, we are making tangible progress on the actions within our control.

“Our cash optimisation programme is delivering with the expected year-end net debt position now materially better.

“The Group continues to make good progress against its strategic priorities. We are building a stronger operational platform through tighter cost control, improved procurement, disciplined land and work in progress management”