UK homebuilder Berkeley urges property tax cuts as buyers stay cautious

[LONDON] British homebuilder Berkeley Group urged the government on Friday (Sep 11) to cut property taxes as cautious buyers keep housing demand subdued in the run-up to October’s Budget.

The London-focused company called for reforms to stamp duty, a property purchase tax, including a 1 per cent cap for first-time buyers and downsizers, and the removal of a 5 per cent surcharge on investors.

Berkeley said that the proposed cap would help first-time buyers get on the property ladder, free up more family homes and increase the supply of rental properties.

Rivals including Bellway and Barratt Redrow have also called for lower stamp duty and government support for first-time buyers to ease affordability constraints.

New Prime Minister Andy Burnham has, however, denied plans to reduce or scrap stamp duty in next month’s Budget.

Facing what analysts have called one of the most challenging markets in recent history, British housebuilders including Berkeley have curbed land buying and slowed construction as affordability concerns, political turmoil and energy-driven cost inflation take hold.

The strains have pushed Britain’s construction sector, and residential building in particular, into a rapid contraction.

Berkeley, which builds homes across London and southern England, said that it was fielding good and stable levels of enquiries, but that customers without an urgent need to move and ready cash remained reluctant to commit.

The company noted that it was pressing ahead with its goal to make £1.4 billion (US$1.9 billion) in pre-tax profit over the next four years, with profits expected to be slightly weighted towards the first half of the current financial year.

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Berkeley added that the prolonged Middle East conflict and political change in Britain had dampened sentiment further, weighing on trading and housing market activity. REUTERS