In the seven months following the Brexit vote, reservations dropped 16% compared to the same period last year, the housebuilder said in a trading statement.
“The reduction in reservations is across all price points and reflects the ongoing impact of both Brexit uncertainty and the changes in recent years to SDLT and mortgage interest deductibility,” the statement said. “This has been partly offset by the continued availability of mortgage finance at low interest rates, favourable currency exchange rates and the quality of Berkeley’s well-presented and well-located homes.”
When coupled with the planning environment and increased demands from the combination of affordable housing, CIL, Section 106 obligations and review mechanisms, this has resulted in new starts in London falling by some 30%.
Berkeley is concerned by this under-supply and the knock-on effect it has on the provision of housing of all tenures which, if not addressed, represents a threat to London remaining the inclusive and open global city which is so important to London and the UK’s growth and prosperity.
Despite the economic uncertainty, Berkeley said that enquiry levels remain robust, cancellation rates are at normal levels and pricing continues to be resilient and above business plan levels.
The housebuilder expects to meet its ambition to deliver at least £3.0 billion of pre-tax profit over the five years ending 30 April 2021. Forward sales are expected to be in excess of £2.6 billion at 30 April 2017 at the prevailing sales rate and Berkeley remains ungeared.
Pre-tax profits for the year ended 30 April 2017 are expected to be at the top end of analysts’ expectations, with the actual outturn dependent upon completion timing on Berkeley’s larger developments. A similar level of profitability is anticipated for the year ending 30 April 2018.