Berkeley profits to be at top end of forecasts

Berkeley Group's underlying reservations in the seven months since the immediate Brexit referendum effect were down 16% but the last two months were ahead of last year.

It said pre-tax profits for the year ended 30 April were expected to be at the top end of analysts' expectations, with the actual outturn dependent upon completion timing on Berkeley's larger developments.

A similar level of profitability was anticipated for the year ending 30 April 2018.

The group said the housing market in London and the South East had now stabilised and emquiry levels remained robust, cancellation rates were at normal levels and pricing continued to be resilient and above business plan levels.

It said: "The reduction in reservations is across all price points and reflects the ongoing impact of both Brexit uncertainty and the changes in recent years to SDLT and mortgage interest deductibility.

"This has been partly offset by the continued availability of mortgage finance at low interest rates, favourable currency exchange rates and the quality of Berkeley's well-presented and well-located homes.

"When coupled with the planning environment and increased demands from the combination of affordable housing, CIL, Section 106 obligations and review mechanisms, this has resulted in new starts in London falling by some 30%."

Berkeley said it was concerned by this under-supply and the knock-on effect it had on the provision of housing of all tenures which, if not addressed, represented a threat to London remaining the inclusive and open global city which was so important to London and the UK's growth and prosperity.

It added: "We therefore welcome the Government's White Paper and the Mayor's continued focus on housing but note that these will take time to effect change, given the competing priorities."

Berkeley said it was uniquely placed to maintain its high levels of production in London and the South East.