Berkeley calls for ‘urgent’ stamp duty reform to meet housebuilding targets

Housebuilder Berkeley Group has urged the Government to cap stamp duty for first-time buyers and downsizing homeowners in order to support property demand.

The FTSE 250 company said “urgent reform” was needed to help meet the Government’s target of building 300,000 new homes each year.

Berkeley told shareholders that the prolonged conflict in the Middle East and ongoing political change in the UK further weighed on sentiment among buyers in recent months.

The group said it was nevertheless “receiving good and stable levels of inquiries”.

But it added that uncertainty and volatility in the UK housing market meant that customers without an immediate need to move or readily available funds were “more cautious to commit” to house purchases.

The firm said it would continue to work towards its £1.4 billion pre-tax profit plan but was “mindful” that some buyers may defer transactions until after the autumn Budget in October.

As a result, Berkeley indicated that it expected pre-tax profits to be weighed towards the first half of the current financial year.

It highlighted that was “encouraged” by the Government’s recognition of the importance of homebuilding, amid Government ambitions to build 1.5 million homes by 2029.

However, it said an overhaul of stamp duty rules was needed to help drive high levels of housebuilding amid market pressure.

The company said: “To meet the Government’s target of 300,000 new homes per annum, and help address the cost-of-living crisis by making homes more affordable, the current stamp duty regime, that was introduced at a time when interest rates were 0.25%, requires urgent reform.

“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.”

It specifically called for 1% stamp duty cap for first-time buyers and downsizers, and removal of the current 5% investor surcharge.

“Collectively, this supports people buying their first home, frees up more family homes, and provides more homes for rent,” the company said.