Berkeley profits rocket as Pidgley criticises affordable housing quotas

Upmarket housebuilder Berkeley Group has posted a 53% leap in pre-tax profit for the year to 30 April and said it was on target to deliver at least £3bn of profit in the five years from 1 May 2016.

In its annual results published this morning, the group also posted a 33% rise in revenue to £2.723bn, while basic earnings per share leapt 58.1% to 467.8p. The group added that £8.34 a share had already been returned or was set to be returned by September 2017 under its shareholder returns programme, with the remaining £8.00 a share (or £1.1bn) scheduled to be delivered evenly over the next four years.

However, the group stated forward sales had dropped to £2.74bn, from £3.25bn at the end of the previous financial year.

Tony Pidgley, chairman of Berkeley, said there were near term challenges in the housing market. Among the issues highlighted, he said demands for affordable housing were hindering the sector. The housebuilder provided more than £500m in subsidies to deliver affordable housing and wider community and infrastructure benefits during the year.

“The housing market has stabilised in London and the South East but, while Berkeley is in excellent shape with further additions to our unrivalled land bank in the period, it is an inescapable fact that we are facing a number of headwinds and a period of prolonged uncertainty,” said Pidgley.

“Brexit and wider global macro instability impact both confidence and sentiment and will result in constrained investment levels. At the same time, the headwinds from changes in recent years to SDLT and mortgage interest deductibility, coupled with the planning environment’s increasing demands from the combination of affordable housing, CIL, section 106 obligations and review mechanisms, are resulting in reduced levels of new housing starts in London.”

Pidgley claimed these factors lead to greater uncertainty around the timing of delivery of homes from Berkeley’s land bank.

Berkeley has built 19,000 new homes in the last five years. In London, it built 10% of all new homes, including 10% of new affordable housing.​

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