(Bloomberg) -- Berkeley Group Holdings Plc said it has seen “notable traction” in the UK planning system in recent weeks, crediting it to a change in tone by the new Labour government.
The housebuilder — a long-term critic of dysfunctions in the planning process — said Labour’s commitments had already galvanized the system, despite analyst warnings that the UK is unlikely to hit the government’s target of building 1.5 million homes over five years.
In a turbulent period for property firms due to economic uncertainty and stubbornly high interest rates, Berkeley’s transaction volumes were around a third lower than the 2023 financial year in the six months through October, according to a statement Friday.
“We are now working closely with all levels of government to ensure that this positive momentum quickly translates into economically viable planning consents to unlock greater investment and delivery on the ground, but this will take time,” Chief Executive Officer Rob Perrins said in the statement. “A meaningful recovery will require a sustained improvement in consumer confidence and stability in the wider macroeconomic environment.”
UK housebuilding declined at the sharpest pace in five months in November, with construction firms blaming weak consumer confidence after the Labour government’s first budget, which raised employer payroll taxes.
Analysts see positive earnings momentum in UK builders over the medium-term. A recent selloff offers a chance to revisit a sector that stands to benefit from supply side planning reforms, Citi said earlier this week.
London-focused Berkeley may be more exposed than peers to an increase in the tax surcharge on additional property purchases, given half of its homes are sold to investors, according to a Bloomberg Intelligence report published last week.
Still, Berkeley — which announced a new venture into rental housing earlier this year — said sales pricing was above business plan levels in the period. It unveiled a 10-year strategy that identified £7 billion ($8.9 billion) to deploy in land investment, construction of its build-to-rent platform and returns to shareholders.
The developer said it remains on track to deliver full-year pretax earnings of £525 million and at least £450 million the following year.
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