New tax burdens and levies imposed by the government and uncertain economic conditions have dampened Berkeley’s appetite for speculation.
Berkeley Group’s half-year revenue for the six-months to 31st October 2022 was down 1.6% to £1200.7m (2021: £1,220.7m). Pre-tax profit down 2% to £284.8m 2021: £290.7m).
However, the London-focused developer increased net cash during the period from £269m to £343m and cash due on forward sales from £2.2bn to £2.3bn.
Chief executive Rob Perrins said: “These outcomes have been achieved against an increasingly challenging operating and regulatory environment, which has been brought into even sharper focus by the deteriorating economic outlook as the world comes to terms with the cost of the pandemic, the war in Ukraine and other global events.
“While Berkeley is ready and able to invest in new opportunities to increase delivery, we are positioning the business to reflect today’s environment until the conditions for growth are present to support responsible, sustainable investment. Future investment decisions will need to take into account the increase in corporation tax of 6%, the 4% RPDT [residential property developer tax] and the proposed additional building safety levy designed to raise a further £3 billion from the industry.
“We are experienced at operating in times like these and will focus on generating value from our existing assets with limited new investment, matching supply to demand and cash generation.
“London is the most beautiful and dynamic city in the world but is not currently attracting the necessary investment from private or public sources, including for infrastructure and affordable housing grant, to unlock more brownfield sites and address the systemic under-supply of new homes.”
He added: “In the near-term, Berkeley will focus on matching production on existing sites to demand and delivering its forward sales over the period to 30th April 2025. Beyond this, the current operating environment, characterised by record levels of planning tariff within an increasingly complex and slow planning system, at a time of high build costs, increased regulation and higher corporation tax, alongside the RPDT and proposed new Building Safety Levy, will inevitably continue to see a reduction in supply of new homes in London and the southeast. Berkeley’s delivery of new homes will therefore result in a reduction in its land holdings.”