Berkeley says it now takes eight years to build a flat in London and calls for tax cuts and red tape overhaul to kickstart building

Berkeley Group has warned the housebuilding market in London has no prospect of improvement without “decisive intervention” from ministers including tax cuts and regulatory changes.

The housebuilder, which earlier this year halted land acquisitions citing rises in regulation and costs, in its annual results today reported turnover of £2.38bn for the year to 30 April, down 4% on last time. Pre-tax profit fell 15% to £451m.

Although Berkeley still met its guidance for the year, its executive chair Rob Perrins warned structural supply and demand challenges have left London delivering less than 10% of its annual homes target with “no prospect of material improvement without more decisive intervention as it is clear that policy changes to date are not feeding through to delivery”.

Perrins said it now takes at least eight years to complete an apartment building in London “from the point of acquisition, through planning, agreement of section 106 requirements, consultation with statutory consultees, clearance of pre-commencement conditions, detailed design, Building Safety Regulator approval and construction”. Perrins added that a further 18 months is then required for an appeal or call-in, saying a decade ago the process took five years from start to finish.

He said demand for and supply of new homes has been hit by continual stamp duty increases and surcharges and added that stamp duty should be reduced on all new homes to a maximum of 3% and surcharges scrapped. He said these changes would be “fiscally neutral” because of tax revenues generated from the resulting increased transactions and housebuilding.

Perrins also called for the emergency “Homes for London” package, which saw affordable housing requirements lowered and requirements reduced, to remain in place “until housing numbers are restored.” He said the time taken to deliver apartment buildings should be lowered through review mechanisms of required returns to “incentivise development” while section 106 mechanisms “should be objectively assessed in a timely fashion with competing policy requirements and layering removed”.

He also called for a reduction in the “excessive tax burden” facing housebuilders and for regulators, including the Building Safety Regulator, to be adequately resourced.

Berkeley said its halt on acquiring new land, except through joint ventures, will remain in place while current “conditions prevail”.

It said: “Berkeley does not currently believe it can make its required rate of return on investment in new land acquisitions due to the continuous increase in the tax and regulatory burden on residential development.” It added that the introduction of the Building Safety Levy, which comes into force this October and is a tax on new residential blocks with the money used to carry out historic safety repairs, is “counter-productive”.

Berkeley completed 4,076 new homes in the year, a similar figure to the 4,047 recorded for the previous year. Its average selling price dropped from £593,000 to £546,000, which it said was due to the mix of properties changing.