Housebuilder Berkeley noted that unfavourable conditions in London indicate that housebuilding starts have decreased by 30% on 2015.
On Wednesday, the builder, a part of the FTSE 250 index, announced during a trading update that it had traded based on expectations over the last four months and was on track to post a pre-tax profit of around £3 billion in the 5 years to April 2021.
However, it revealed that Brexit uncertainty, stamp duty – which was increased in 2016 – changes to tax relief on mortgages were hurting the capitals housing market.
The statement stated: “While Berkeley is in excellent shape, the London market continues to be adversely impacted by both, uncertainty around the terms and implications of Brexit and, the changes in recent years to SDLT [stamp duty] and mortgage interest deductibility.”
It has noted that the planning environment of London “remains challenging” and is “still yet to reflect the current market conditions.”
“As a consequence, new construction starts in London remain some 30% lower than 2015,” continued the statement.
The property firm, JLL published figures in March and has revealed that the number of new houses breaking ground in central London decreased by 75 percent this year as builders pull back in spite of increasing costs and declining house prices.
On the other hand, shares in Barratt Developments, the United Kingdom’s largest house builder were down by over 4 percent after the company revealed full-year results which saw pre-tax profits rise 12 percent in the year to June but house-building volumes remain unchanged.
The group earned a pre-tax profit of £765 million on revenues of £4.56 billion, up 9.8 percent from the similar period in 2016.
However, volumes on house-building grew only 0.4% to 17,935 in 2017 so far, and the group assumes only “modest” growth in the coming year.