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Berkeley Group slams government policy on London housing market

Berkeley Group has said the government’s housing policies will lead to London missing its target for new homes.

In a trading update to the City covering the period from 1 May 2016 to 31 August 2016,  the housebuilder said that while the government’s policies had been “helpful” outside London, it was “increasingly clear… [policy] has had a negative effect on the capital”.

”Transaction taxes are now too high and this is restricting both mobility in the second-hand market and the pace of supply and delivery of new homes in London and the South-east,” the firm said.

It also warned that London will “fall well short of its target for new homes” if the government continues with its current policies.

“There is also a tension between the national policy on Starter Homes and the London mayor’s ambition to build more affordable housing, while the very high rates of the Community Infrastructure Levy adopted by local authorities now pose a significant threat to development viability,” the group added.

Berkeley reaffirmed its ambition that it will hit pre-tax profit of £2bn in the three years to 30 April 2018, having delivered the first £500m of this in the year to 30 April 2016.

In June this year, the firm said it reservations were 20 per cent lower in the first five months of 2016, compared with the same period a year earlier, due to the impact of higher property taxes and uncertainty around the EU referendum.

The firm backed the campaign to remain in the European Union ahead of the vote in June.

However, it added that the market had “returned to relative levels” seen earlier in the year after a hiatus “either side of the referendum”.

The group did note that, while customers were “taking longer to commit,” enquiry levels were similar year on year, demonstrating “the strength of underlying demand”.

The company said that it had been “selective” in the land market, acquiring just two sites in the period, both unconditionally.

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