Planning woes turn Berkeley off new development

Housebuilder Berkeley Group has said it is not currently investing in new developments “due to the planning and regulatory environment”. The firm, which announced a solid set of financials for the six months ended 31 October with net cash up by £12m to £422m and pretax profit up by 4.6% to £298m, said that while urban regeneration was a clear national policy, it was becoming increasingly difficult to deliver. “It has become increasingly difficult to progress this form of development as changes to planning, tax and regulatory regimes have created an increasingly uncertain, unpredictable and burdensome environment,” said chief executive Rob Perrins. He added: “This is driving investment away from urban areas, restricting growth and preventing homes and other tangible benefits being delivered. It will lead to lower productivity, fewer jobs being created and net zero being harder to achieve, as the efficient reuse of land in urban settings to deliver, well-connected, nature-rich new communities, near existing infrastructure is the most sustainable form of development.” Perrins said Berkeley, which he expects to deliver at least £1.5bn of pretax profit by April 2026, would be intensifying its approach to operating cost control and work-in-progress investment, focusing on financial strength and existing sites, rather than new opportunities. He added: “We are ready and able to deploy capital into new opportunities once the market and regulatory cycles inflect and returns can be earned commensurate with the level of upfront investment and operational risk we undertake.” The group said changes to the National Planning Policy Framework and their impact on the efficacy of local plans; the Levelling Up and Regeneration Act; the requirements for second staircases in tall buildings, which are still not finalised; recent updates to building regulations on energy efficiency, ventilation and overheating; the requirements of the Future Homes Standard; the introduction of the 4% RPDT (with further levies being consulted on); the Self-Remediation Terms and Contract; and the introduction of the new Building Safety Regulator and associated new regulation were all making the planning system complex, uncertain and unpredictable. “We are wholly aligned with the ambition to build more quality affordable and private homes where they are most needed, and to play our full part in meeting the country’s net zero target,” said Perrins. “However, the burden of achieving this, at a time when the economy is adjusting to more normal conditions following a decade of zero interest rates, must be recognised and priorities set, as housing cannot continue to cross-subsidise at these levels, without increased public funding. In addition to this, the industry is currently the subject of a Competition and Markets Authority study with which we are fully and openly participating.” He added: “The longer the status quo continues, the more the adverse impact on current and future supply is compounded and capacity within the industry is reduced, with SMEs particularly affected, as the number of new homes being started, already well below the recognised need, will continue to decline.” During the period under review, Berkeley delivered 1,758 homes, plus a further 204 in joint ventures. This was down from 2,080 and 251, respectively, for the same period a year earlier. It has land holdings with some £7.2bn of future gross margin. To send feedback, e-mail samantha.mcclary@eg.co.uk or tweet @samanthamcclary or @EGPropertyNews Image from Berkeley Group