London’s biggest housebuilder is to halt buying up land for development because of “unprecedented” increases in costs and regulation, and weak demand from buyers in another setback to the Government’s targets for new homes.
In a bombshell strategy update Berkeley Group laid out a new policy “to reflect the current operating environment.” It said that hopes of as recovery in the market have been dashed by the outbreak of war in Iran “and the macroeconomic consequences, including reduced potential for further rate cuts.”
Shares in the company slumped by almost 18%, or 616p to 2,820p despite an assurance that pre-tax profits for the year to 30 April will be in line with guidance at £450 million.
The company, which has more than 50 sites all around London and the south east said that it needed a “stable, predictable and supportive operating environment” to make the required financial returns on the upfront investments it makes in the “brownfield regeneration projects” it specialises in.
However, “recent years have seen an unprecedented increase in cost and regulation, at a time of increasing interest rates and faltering consumer confidence, amidst prolonged geopolitical and macro-economic volatility and uncertainty.”
This has included the Government news building safety regulatory regime put in place after the Grenfell disaster which “has lengthened the time between obtaining planning approval and starting on site by around twelve months. “
Berkeley said that, as a result, it “does not believe it can make its required rate of return on investment in new land acquisitions. This is due to the continuous increase in the tax and regulatory burden on residential development, which other land uses do not experience, allowing them to pay higher land values. Where residential transactions have been taking place, land prices have been overheated.
“Berkeley is therefore not proposing to acquire new land while these conditions prevail, except through joint venture arrangements, and will focus on its existing land holdings.”
The hard stop to land buying comes after a sharp slowdown in acquisitions with just three sites bought over hte past three years.
The company currently has a land bank sufficient for 50,000 homes with a further pipeline of more than 10,000 homes. It said construction work on live existing sites will be slowed “to match the sales levels we are currently achieving” and “the pace of Building Safety Regulator approvals.”
The new approach comes days after Housing Secretary Steve Reed and the Mayor confirmed the implementation of an emergency “Homes for London” package of measure to kick-start stalled housebuilding in the capital.
These include a reduction in the level of affordable housing needed for a scheme to qualify for fast-track planning from 35% to 20%, and temporary relief from the Community Infrastructure Levy charges paid by developers for schemes that meet affordable housing targets.
Berkeley said that while it welcomed the package “to be successful, it will now require pragmatic and flexible implementation by local authorities to give homebuilders the certainty to invest and bring forward currently stalled regeneration schemes at pace to address the decline in new home starts in London.”
Housing starts in London have collapsed over the past year. According to analysts Molior only 3,248 homes began construction over the first nine months of 2025, equivalent to just 11% of the recent average and under 5% of the government's target for the capital.
Berkeley said it will continue to target an operating margin “within its historic range of 17.5% to 19.5%” and anticipates delivering more than £1.4 billion of pre-tax profit over the next four years up to 2030.
