Rule-out fresh tax raid or risk fewer homes, housebuilder tells Reeves

Berkeley Group has urged Rachel Reeves to rule-out hiking taxes on housebuilders in her upcoming budget amid growing evidence the Government will not hit its new home targets.

The construction sector is suffering its longest downturn since the beginning of the pandemic, with housebuilding output currently falling short of the pace required to meet Housing Minister Angela Rayner’s plan to build 1.5million homes by 2029.

Official data published on Wednesday revealed just 38,780 new homes were completed between January and March this year, which is just over half the amount needed in every three-month period to meet the target.

Housebuilders have previously cited higher build costs and mortgage rates, and continued planning delays as new home output has disappointed.

Berkeley Group, which operates across London, Birmingham and the south of England, on Friday called on the Government to go beyond planning reform and push deregulation efforts further to achieve its new home target.

The FTSE 100 firm cited industry figures showing a ‘continued decline in new housing starts in London to levels not seen since the financial crisis over 15 years ago’.

‘This is due to a confluence of well-documented regulatory, economic and market factors,’ Berkley said, as it urged Reeves to abandon any plans to increase the tax burden faced by the sector in her 26 November budget.

The group added: ‘The focus must be on de-regulation, resolving the challenges of the Building Safety Regulator and not increasing taxation over and above the Building Safety Levy introduced in the period; be this through the changes to Landfill Tax, currently being consulted upon, or further property taxation, as this will deter investment.

‘The Government’s positive stance on planning reform demonstrates its determination to drive national growth through new housing delivery and has been greatly welcomed by Berkeley and the industry.’

Berkeley shares were up 1.3 per cent to £36.28 in early trading, bringing 2025 losses to around 7 per cent and one-year losses to roughly 30 per cent. 

Richard Hunter, head of markets at Interactive Investor said: ‘Previously, the group had advantages arising from its primary focus on London and the South East.

‘Higher house prices had followed from a systemic undersupply of homes, employment levels remaining strong and the recent round of wage rises (while inflationary) helping to mitigate some of the problems. 

‘However, Berkeley has today revealed that new housing starts in London are currently at levels not seen since the Great Financial Crisis of 2008

‘These overarching concerns have been reflected in the share price performance.

‘Berkeley was probably fortunate to retain its premier index status in this week’s reshuffle and for the time being investors remain unconvinced by the recovery potential, with the market consensus stuck at a hold, albeit a strong one.’