Increasing risk and regulation in London are causing housebuilders and funders to leave the city, exacerbating undersupply in the capital, Tony Pidgley, chairman of Berkeley Group, has warned.
Pidgley, writing in his firm’s annual results, said London was missing out on the positive national picture in housebuilding. While completions have grown by 16% and starts by 5% across England in 2017, London starts are about 30% down on where they were two years ago.
He said: “It is telling that some funders and builders are choosing to exit the market when faced with the degree of risk and regulation that now confronts development in the capital, where macro and political uncertainty, including Brexit, are leading to this caution.
Pidgley added that the exodus was a “great shame” when one considers that London’s position as a world-class city would last “long beyond the current hiatus”.
Berkeley’s statement said that meeting London’s housing targets would require more builders, which was difficult because the barriers to entry were too high.
It also called for continued access to EU labour, skills training and innovation in construction to meet demand and address the fact that more than half of London’s site labour comes from the EU.
The housebuilder said London needed more buy-to-let property, adding that build-to-rent property did not “support the same level of affordable housing” as buy-to-let and would not deliver homes that were suitable for or available to homeowners in the way buy-to-let did.
Berkeley said the market needed both types of tenure to meet the target of 65,000 new homes in London each year – a figure that was currently 20,000.
Its full-year results showed that the firm sold 3,536 homes in the year to April, down from 3,905 in the previous year. The average selling price, however, rose from £675,000 to £715,000.
Revenue was flat at £2.7bn, though profit before tax jumped by 15.1% to £934.9m. Earnings per share were up by 20.3% to 562.7p.
It acquired 12 new sites, totalling 3,600 plots, bringing its land holdings to 46,876 plots with an estimated future gross margin of £6bn.
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