Housebuilder says buyers remain cautious and removing ‘binding constraint’ of higher stamp duty would boost market
Berkeley has called on Andy Burnham to lower stamp duty rates to boost the housing market.
The housebuilder, in a short trading update today, said stamp duty land tax (SDLT) was previously a “manageable frictional cost” when interest rates were low but has now become a “binding constraint” on demand.
It called for a targeted intervention to lower the tax to ‘support the new build sector.’ Currently homebuyers are charged SDLT on properties with a purchase price of more than £125,000 at rates rising from 2% to 12% depending on property value.
Berkeley is proposing government cap SDLT at 1% of the purchase price for first time buyers and downsizers. It also said it should remove the 5% investor surcharge.
It said: “Collectively, this supports people buying their first home, frees up more family homes, and provides more homes for rent.
“Increasing transactions of all kinds will facilitate significantly higher rates of housing delivery of all tenures, including the critical affordable housing that is delivered alongside new private homes, and that would otherwise not come forward.”
The housebuilder said that while enquiries are ‘good and stable’ the uncertainty and volatility in the market “customers without an immediate need to move and readily available liquidity remain more cautious to commit”. It said some buyers may defer transactions until after the Budget next month.
Berkeley said it is continue to operate within its four-year £1.4bn pre-tax profit plan. It said profit for the year to 31 August will be weighted toward the first half.
The group in June warned the housebuilding market in London has no prospect of improvement without “decisive intervention” from ministers., It reported a 14.7% drop in pre-tax profit for the year to 31 August.
The group also earlier this year halted land acquisitions citing rises in regulation and costs.
It said: “On 1 April this year, Berkeley announced a re-phasing of its strategic delivery over the next four years to reflect the deterioration in the economic outlook that accompanied the emerging conflict in the Middle East, reducing production by around 25% over this period with our focus on cash generation, ahead of short-term profit targets.”
Berkeley placed sixth in Housing Today’s Top 50 Housebuilders list last year, which ranks firms by housing turnover.
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