Berkeley shares dive as it halts new land deals amid struggles with red tape, tax and the impact of the Iran war
House builder Berkeley will stop buying land as it reels from red tape and tax burdens, and the impact of the Middle East war.In a shock update that sent the FTSE 100 company’s shares plunging by as much as 19 per cent to a nine-year low, Berkeley also flagged up a slowdown in profit growth and put the brakes on investment in construction.And it said there is a risk that London will ‘have no new homes’ unless the Government prioritises housebuilding, as storage firms such as Big Yellow pip residential developers for land.The announcement yesterday will further damage Labour’s ambition to build 1.5m homes over the course of the current Parliament. Berkeley said its sales had begun to see a ‘modest recovery’ in the first two months of this year.But in March it warned of the risk posed by the fallout from the Iran war, which has wiped out hopes of interest rate cuts, in reducing confidence in the market. Down tools: Berkley shares plunged by as much as 19% to a nine-year low as the housebuilder flagged a slowdown in profit growth and put the brakes on investment in construction‘This has now become a reality,’ the group said. Berkeley also pointed to an ‘unprecedented increase in costs and regulation’ over recent years – something non-housing developers do not face.That means it cannot make the returns it needs from investing in new land. ‘Berkeley is therefore not proposing to acquire new land while these conditions prevail, except through joint venture arrangements, and will focus on its existing land holdings,’ the group said.Speaking to reporters, chief executive Rob Perrins called for the Government to axe the building safety levy, which will pay for a repair fund for unsafe buildings.Perrins also wants Labour to ‘get rid’ of the community infrastructure levy, which housebuilders pay for public developments such as schools or roads. And he argued that stamp duty must come down, and the cost and time needed to obtain planning permission should be reduced.‘The Government needs to prioritise housebuilding land and not allow Big Yellow to buy all the land, because London will have no [new] homes, fundamentally, if we carry on as we are,’ Perrins said.The group currently holds land comprising over 50,000 homes, with a further 10,000 in the pipeline, in London and south-east England.Berkeley also said it would reduce investment in construction work that was in progress to match current sales levels.The gloom has hit its profit expectations for the next few years, as it is now forecasting total profits of £1.4billion between 2027 and 2030 – less than predicted by analysts. Its shares ended yesterday 9.7 per cent, or 332p, lower at 3104p.DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you
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Berkeley shares dive as it halts new land deals amid struggles with red tape, tax and the impact of the Iran war
