- Berkeley says some buyers are delaying transactions until after the October Budget.
- The housebuilder says political uncertainty and the wider economic environment have weakened buyer confidence.
- Berkeley is calling for an urgent reform of stamp duty as the government pursues its target of building 300,000 new homes a year.
Britain’s housing market is entering the autumn with an unusual obstacle: some buyers are choosing to wait rather than complete their transactions until they know what the government will announce in October’s Budget.
Berkeley, one of the UK’s largest housebuilders, said activity had deteriorated further in the four months to the end of August, with political change and uncertainty in the UK, alongside the conflict in the Middle East, weighing on confidence.
The developer said it was still receiving “good and stable levels of inquiries”, suggesting that people remain interested in buying homes. The problem is that interest is not necessarily translating into completed purchases.
Customers who do not have an immediate need to move and have readily available funds are proving more reluctant to commit, Berkeley said.
It warned that “some buyers may defer transactions until after the budget at the end of October and any election uncertainty dissipates”.
That creates another period of uncertainty for a housing market already struggling to regain momentum.
Berkeley operates mainly across London and the southeast and built 4,076 homes in its last financial year. Its shares have fallen about 10 per cent over the past year, closing at £32.84 after a 0.3 per cent decline.
The problem goes beyond cautious buyers
The uncertainty is affecting developers as well as prospective homeowners.
Berkeley warned in April that it was struggling to generate sufficient returns from new projects. It stopped buying new land and said it would slow build rates at existing developments, raising concerns about its ability to contribute to Labour’s target of 300,000 new homes a year.
The company has since renewed its call for government action, arguing that the stamp duty land tax system needs “urgent reform”.
Berkeley said SDLT had been introduced in an era when interest rates were as low as 0.25 per cent. With borrowing costs now at more normal levels, it argues that the tax has become a greater obstacle to transactions.
“What was a manageable frictional cost when interest rates were at those unique and unsustainable levels has become a binding constraint now that interest rates have returned to more normal levels,” the company said.
Berkeley argues that the government may actually be losing tax revenue because fewer transactions are taking place.
“Far more tax revenue is being lost through depressed activity than is being gained through stamp duty land tax on new-build homes as set out by HMRC’s own assessment,” it said.
The developer has proposed a targeted intervention that would cap stamp duty at 1 per cent for first-time buyers and downsizers, while removing the 5 per cent surcharge paid by investors.
It says the measures could encourage first-time buyers into the market, allow families to move into larger homes and increase the supply of properties available for rent.
The debate comes as Berkeley tries to manage a significantly reduced profit outlook. In April, it forecast aggregate pre-tax profit of £1.4bn between 2027 and 2030, almost £600m below City analysts’ previous expectations.
The company said it remained within that target, although it now expects profits to be “broadly even over this period”. Analysts at Davy noted the change in timing, while Goodbody described it as a “de facto 2027 downgrade versus the original April guidance”.
Berkeley also expects pre-tax profits in the current financial year to be slightly weighted towards the first half, depending on when homes are completed.
For the government, the dilemma is becoming harder to ignore. Britain needs more homes, but one of its largest housebuilders is warning that both sides of the market are hesitating: buyers are waiting for clarity before committing, while developers are becoming more cautious about investing in new sites.
