Berkeley Group has called for sweeping stamp duty reforms, including a 1% cap for first-time buyers and downsizers and the removal of the 5% investor surcharge, as uncertainty continues to weigh on the housing market.
The housebuilder says buyers without an immediate need to move or readily available liquidity remain cautious about committing to purchases amid economic and political uncertainty.
Berkeley has already reduced planned production by around 25% over four years and paused land investment as it prioritises cash generation.
It now wants the Government to use stamp duty reform to stimulate transactions and help unlock higher levels of new housing delivery.
STAMP DUTY REFORM
Berkeley is proposing three targeted changes: capping Stamp Duty Land Tax at 1% for first-time buyers, introducing the same 1% cap for downsizers and removing the 5% additional surcharge paid by property investors.
The housebuilder argues the measures would support first-time buyers, encourage older homeowners to release larger family properties and increase investment in rental housing.
It says the current SDLT regime has become a greater barrier to transactions now that borrowing costs are substantially higher than when interest rates stood at 0.25%.
Berkeley also points to historic Office for Budget Responsibility estimates suggesting that every 1% reduction in SDLT could increase transactions by up to 6%.
BUYERS HOLD BACK
The intervention comes as Berkeley reports stable levels of enquiries but continued caution among prospective buyers.
The developer warns that some purchasers could defer transactions until after the Budget at the end of October and until wider political uncertainty has eased.
Despite the subdued environment, Berkeley remains within its four-year plan to generate £1.4bn of pre-tax profit, although profits in the current financial year are expected to be slightly weighted towards the first half.
Net cash is expected to stand at around £250m at the half year.
HOUSING DELIVERY
Berkeley says it supports the Government’s planning reforms in London, including the Homes for London package and updated National Planning Policy Framework, but argues implementation is now critical.
It says the reforms should help reduce regulatory costs, accelerate planning and bring stalled brownfield sites into construction, although greater consistency in planning decisions is still required.
Berkeley says: “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.
“Increasing transactions of all kinds will facilitate significantly higher rates of housing delivery of all tenures, including the critical affordable housing that is delivered alongside new private homes, and that would otherwise not come forward.”
