Berkeley calls for stamp duty reform amid subdued housing market

(Sharecast News) - Housebuilder Berkeley said housing market activity has been further impacted by the ongoing conflict in the Middle East and political uncertainty in the UK, with buyers "more cautious to commit".

The firm, which earlier this year reduced production to focus on cash generation rather than short-term profit targets in response to the Iran war, told shareholders on Friday that the conflict had continued longer than initially anticipated, while "ongoing political change and uncertainty" was further impacting housing sentiment.

"While Berkeley is receiving good and stable levels of enquiries, the uncertainty and volatility in the market means that customers without an immediate need to move and readily available liquidity remain more cautious to commit, a position similar to that reported with our full year results in June," the company said in an AGM statement.

While full-year pre-tax profits are expected to be weighted towards the first half (May to October), it was mindful that prospective purchasers may defer transactions until after the Autumn Budget statement at the end of October.

Berkeley called for "urgent reform" in the current stamp duty land tax (SDLT) regime if the government is to meet its target of 300,000 new homes per annum.

The current regime was introduced at a time when interest rates were 0.25%, it has now become a "binding constraint" in a more 'normal' interest rate environment.

"Far more tax revenue is being lost through depressed activity than is being gained through SDLT on new build homes as set out by HMRC's own assessment," the company said.

Berkeley suggested a "targeted intervention" to support the new build sector, calling on the government to cap SDLT at 1% for first-time buyers and downsizers, and to remove the 5% investor surcharge.

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