London undersupply worries Berkeley17th Mar 2017
In the seven months since the EU referendum Berkeley has seen reservations down 16% on the previous year due to "Brexit uncertainty" and stamp duty changes. As a result of this, and planning challenges, new starts in London have fallen by 30%.
However in a trading statement released on March 17 the firm said the market for London and the south east has stabilised, with reservations in the past two months ahead of last year.
The reduction in reservations was experienced across all price points reflecting "the ongoing impact of both Brexit uncertainty and the changes in recent years to SDLT (stamp duty) and mortgage interest deductibility". The firm said that this has been partly off set by "by the continued availability of mortgage finance at low interest rates, favourable currency exchange rates" and the quality of Berkeley's 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%," said Berkeley. The firm said it is concerned by this undersupply and the knock-on effect it has on the provision of housing of all tenures.
If this is not addressed, said Berkeley, it 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.
"We therefore welcome the government's White Paper and the mayor's continued focus on housing but note that these will take time to effect change, given the competing priorities," the firm said.
Berkeley is onsite in production on 58 sites in London and the south east and there are a further 22 sites that are either in the planning process or that Berkeley is unable to start onsite due to the number of pre-commencement conditions to be cleared or other enabling issues.
Berkeley is on target to deliver at least £3 billion of pre-tax profit over the five years ending April 30 2021, with profits to the end of April this year expected to be at the top end of analysts' expectations, with similar profit expected next year.
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