Brexit and 'attack on buy to let' cuts demand for homes by 20%

A housebuilder that has in the past profited from its concentration on high-end London schemes says demand for its units is down 20 per cent thanks to Brexit and “the attack on buy to let” by the current government.

Berkeley Homes, in a report to the City, says after a post-EU referendum hiatus, transaction levels are improving again and the market “has begun to adjust to the increased stamp duty [three per cent surcharge] and general uncertainty".

However, it says it remains a victim of the government’s “extraordinary attack on buy to let landlords” in the shape of higher stamp duty and a reduction in mortgage interest tax relief from next spring, in addition to other measures.

The firm says pricing remains relatively firm and has moved in line with the market; in some cases, it says, the firm has absorbed the stamp duty hike with price increases at other price points balancing income. 

"Government policy has generally sought to increase the level of home ownership, focusing on the demand side which has clearly been helpful outside of London, but has had a negative effect on the capital" said the firm in a statement to shareholders.

"High transaction costs are restricting both mobility in the second-hand market as well as the pace of supply and delivery of new homes in London and the south east," the housebuilder added.

The firm has also warned that while it is seeking to improve its own apprentice intake, the construction sector generally has "more people leaving the industry than joining it", suggesting difficulties in meeting house building demand in the long term. 

The builder reported a 24 per cent rise in revenue to £1.41 billion for the six months to the end of October, up from £1.14 billion a year earlier; it has also enjoyed a 34 per cent pre-tax profit hike to £392.7m from £293.3m.