Business 4 min read By Arthur Ellington
Berkeley warns of weak housing demand ahead of UK budget and urges urgent tax reform
Housebuilder Berkeley Group has warned that housing demand remains subdued ahead of the UK budget and called for urgent reform of property taxes, as the sector faces persistent affordability and confidence pressures.
Berkeley Group has warned that housing demand remains weak ahead of the UK budget, urging the government to press ahead with urgent reform of property taxes. The FTSE 100 housebuilder said the market is being held back by a combination of affordability constraints, consumer caution and uncertainty over future policy, adding that the upcoming fiscal statement is unlikely to provide the clarity the industry needs unless it addresses the tax burden on buyers and developers.
The company, which focuses on large-scale regeneration projects in London and the South East, said reservations and sales rates have remained below historical norms in recent months. It attributed the softness to elevated mortgage costs, the withdrawal of pandemic-era support measures and a broader reluctance among households to commit to major purchases while the economic outlook remains unclear. Berkeley also noted that the cost of building remains high, with labour shortages and regulatory requirements adding to pressure on margins.
In its call for reform, Berkeley argued that the current system of property taxation is distorting the market and deterring investment. It pointed to stamp duty as a particular barrier, saying the tax adds significant upfront costs for buyers and reduces transaction volumes. The company has previously advocated for a fairer, more predictable tax regime that would encourage downsizing and support first-time buyers, and it repeated those calls ahead of the budget.
The intervention comes as the wider UK housing market continues to show signs of strain. Mortgage approvals have fallen from their recent peaks, and survey data suggest that buyer enquiries and new instructions remain subdued. While some lenders have begun to cut rates in anticipation of future reductions in the Bank of England’s base rate, affordability remains stretched after a prolonged period of high borrowing costs.
Berkeley’s warning adds to pressure on the Chancellor to use the budget to stimulate activity in the housing sector. Industry bodies have consistently argued that housing is a key driver of economic growth and that a lack of supply is exacerbating affordability problems. They have called for measures to boost construction, streamline planning and provide targeted support for buyers, particularly those on lower incomes.
However, the fiscal backdrop is tight. The government has limited room for manoeuvre, and any tax cuts would need to be funded through spending reductions or higher borrowing. That has led to speculation that the budget may focus on supply-side reforms rather than direct demand stimulus, with planning changes and investment in infrastructure seen as more likely candidates.
Berkeley itself has maintained a relatively cautious outlook. The company has a strong balance sheet and a long land bank, which gives it some resilience, but it has slowed the pace of new site openings in response to weaker demand. It has also shifted its focus towards rental and affordable housing, areas where it sees more stable demand and where it can work in partnership with institutional investors and housing associations.
Analysts said Berkeley’s comments underline the challenges facing the sector and the importance of policy certainty. They noted that without meaningful reform, housebuilders are likely to remain cautious about increasing output, which could prolong the shortage of homes and keep prices elevated. For now, the market is waiting to see whether the budget delivers the changes Berkeley and others have been calling for.
