Berkeley chief executive Rob Perrins today railed against “the continually evolving and increasingly burdensome regulatory environment”.
He said: “While well-intended, this is constraining investment into brownfield regeneration and homebuilding.”
The latest quarterly Department for Levelling Up, Housing & Communities (DLUHC) data show new starts in London in 2022 of just over 20,000 units, which is broadly consistent with the long-run average over the last 10 years. The current London Plan target is 52,000 new homes per annum and the government's identified local housing need is 94,000 per annum.
Housing production in London and the southeast will only decline in the coming years, Rob Perrins warned.
He said: “Beyond the near-term, the current operating environment, characterised by record levels of planning tariff within an increasingly complex, uncertain and slow planning system, at a time of high build costs, increased regulation and higher corporation tax, alongside the Residential Property Developer Tax and proposed new Building Safety Levy, will inevitably continue to see a reduction in supply of new homes in London and the southeast.”
He said: “We are concerned that December's proposed changes to the NPPF (national planning policy framework) would weaken the presumption in favour of sustainable development and the status of five-year land supply targets will materially reduce the pace of delivery of new homes. Sadly, this has already come to fruition with 55 Local Authorities pausing or abandoning their local plan making process as a consequence of the uncertainty within the planning process.
“While the government's ‘brownfield first’ strategy is unquestionably the right way to deliver the homes the country needs where they are needed most, the planning system is yet to recognise the challenges of this most sustainable form of home-building and is not taking account of today's evolving regulatory environment.
“The challenge is increased when set alongside the uncertainty from a continually evolving and increasingly burdensome regulatory environment. While well-intended, this is constraining investment into brownfield regeneration and homebuilding. If housing delivery is to be maintained the planning system needs to respond to these challenges and certainty is needed in the regulatory environment as a matter of immediate priority.”
Despite all of this, Berkeley Group Holdings reported profit before tax up nearly 10% to £604.0m (2022: £551.5m) for the year ended 30th April 2023 from revenue of £2,550m (2022: £2,348m).
Berkeley completed 4,043 homes during the year, plus 594 in joint ventures (2022: 3,760, plus 872) – 86% of which are on regenerated brownfield land.
"This is a very strong performance by our sales and construction teams, given market conditions and changing building regulations, and reflects the resilience of Berkeley's business model with its focus on the country's most undersupplied markets,” Perrins said.
Despite all of this, Berkeley still expects to make aggregate pre-tax profits of at least £1.05bn over its next two financial years.
“We continue to see good levels of enquiry for well-located homes built to a high standard of design and quality but recognise that the market is likely to lack urgency until there is more certainty over the trajectory of interest rates.
“Looking forward, we are well placed to meet our guidance for the next two financial years and continue investing in our existing regeneration sites, but will remain cautious in committing to new investment until the conditions for growth are in place.”
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