The housebuilder has warned that government policy is making London increasingly unaffordable, which will have a negative effect on the rest of the country.
“What is increasingly clear is that government policy, which has been helpful outside London, has had a negative effect on the capital,” Berkeley said in a trading statement. “Transaction taxes are now too high and this is restricting both mobility in the second hand market and the pace of supply and delivery of new homes in London and the South East.”
The housebuilder reported that there is also tension between the national policy on Starter Homes and the London Mayor’s ambition to build more affordable housing, while the very high rates of the Community Infrastructure Levy adopted by local authorities now pose a significant threat to development viability.
While these challenges persist, and the barriers to entry for small builders remain high, London will fall well short of its targets for new homes,” Berkeley warned. “This is not just a problem for business and ordinary people in the capital but for the country as a whole,” the statement said. “London is the engine of our national economy and the principal driver of fiscal revenues.
“So this is not just a question of housing Londoners – important though that is. It poses a risk to deficit reduction and the prosperity of the whole country.”
Berkeley reported that reservations were some 20% lower in the first five calendar months of 2016 compared to the same period in 2015, as customers adjusted to higher property taxes and the uncertainty surrounding the UK Referendum, with Berkeley deferring the release of new product to the market.
After a hiatus either side of the Referendum, the market in August, traditionally a quiet month, has returned to the relative levels reported for the first five months of the year; approximately 20% down on August 2015, reflecting the lower levels of available product, as well as the broader market conditions.
Importantly, throughout 2016, site visitor numbers and enquiries have been at similar levels to the same period last year demonstrating the strength of underlying demand, although customers are taking longer to commit. Pricing has remained resilient and above business plan levels with reservation cancellation rates at normal levels, following a temporary and expected increase after the UK Referendum result.