Chairman Tony Pidgley says Brexit and policy changes are hitting housing starts in London
Berkeley Group has seen its pre-tax profit leap more than 50% in the last year, while revenue was up by nearly a third.
The housebuilder reported that pre-tax profit had jumped 53% to £812m for the year ended 30 April 2017, up from £530.9m for the previous year.
Revenue also increased by 32% to £2.7bn for the year, up from £2.05bn in the company’s previous full year results, while net cash holdings stood at over £285m.
Berkeley reported that it currently has 90 sites, of which 58 are in construction, a further 14 have at least a resolution to grant planning but the consent is not yet implementable, while the remaining 18 sites are in the planning process.
Since the financial year end the firm added that it has also acquired its first site in St Joseph in Birmingham’s Gun Quarter, where Berkeley said it plans to build 400 new homes.
The firm added that build costs increased by 6% over the year, a similar rate to last year, with currency movements impacting materials pricing. However, Berkeley said it was hard to predict how build costs will be affected by Brexit as half of London’s site labour comes from the EU.
Berkeley’s chairman Tony Pidgley said that while the firm was in good shape and the London and South East housing market had stabilised after disruption from the EU Referendum, “it is an inescapable fact that we are facing a number of headwinds and a period of prolonged uncertainty”.
He added that Brexit, stamp duty and the planning environment along with other factors including the increasing demands from affordable housing were resulting in fewer new housing starts in the capital.
Rob Perrins, chief executive at Berkeley, said that while the current conditions were “adequate” to enable the firm to meet its intention to deliver £3bn in pre-tax profit by 2020 “they do not support the much needed growth in housing delivery in London”.
“We continue to see distortions in the market from these policy measures with UK investors most acutely affected by the taxation changes, offset by overseas customers seeing relative value in the London market.
“The new build market is a small proportion of the overall housing market but drives the delivery of additional housing stock and, importantly, new affordable homes.
“The capital intensive nature of regenerating the complex sites that remain to be developed in London requires the certainty of cash flow and de-risking that forward sales to investors generate. It is therefore important that London remains the open, diverse and aspirational global city that contributes so strongly to the UK’s prosperity,” he said.