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House builder: government interventions have ‘little impact’ in London and South East
The government’s recent interventions on housebuilding have had “little impact” in London and the South East, one of the UK’s biggest house builders has warned.
Rob Perrins chief executive of Berkeley Group, said in his statement for the builder’s annual results that “a number of headwinds” were constraining the market in these areas despite government attempts to boost delivery.
It came as Berkeley posted a £934.9m pre-tax profit for 2017/18, up 15.1% from last year’s figure of £812.4m and sold 3,536 homes in the financial year, including more than 10% of new private and affordable homes in London.
This figure was down slightly from the 3,905 homes Berkeley sold in 2016/17.
Berkeley issued a cautious trading update to the market in March, warning that it was unable to increase production beyond planed levels due to market conditions in London and the South East.
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These headwinds, however, according to Mr Perrins, are “most keenly felt by UK customers, while overseas customers continue to see relative value in the London market”.
Tony Pidgley, chairman and founder of Berkeley, added that “political uncertainty, including Brexit” has led to funders and builders exiting the housebuilding market in the capital.
He noted that starts in London are 30% lower than two years ago, despite a rise in completions of 16% across England over the last year.
He added: “This is a great shame as London is a fantastic world-class city with unique attributes that will last long beyond the current hiatus which is only exacerbating the well documented under-supply.”
In Mr Pidgley’s statement, he also confirmed that Berkeley is now a carbon positive company in terms of the operation of its business and promised that all its homes will operate at net zero carbon by 2030.
Despite a slight drop in revenue and an increase in operating expenses, growth in Berkeley’s joint ventures business drove its higher profits.
The builder also stated that during the period it contributed £420m in Section 106 and Community Infrastructure Levy payments, which are legally required by developers wishing to build in an area.
