Berkeley warns planning reform won’t solve overregulation of housebuilding
Housebuilder Berkeley has warned that continued incremental regulatory changes will continue to place significant pressure on the delivery of new homes, despite the recently-announced planning reforms.
Regulation on the construction of homes has increased recently, particularly in light of the Grenfell tragedy.
The Building Safety regulator, which sets out rules to protect the design and construction of higher-risk buildings, introduces a host of new rules and processes for builders to follow.
Under the new gateway process, there are now three gateways a development must pass through prior to being signed off as safe to occupy.
“Berkeley remains concerned by the impact of the extent and pace of regulatory changes of
recent years, as we now await details of the new Building Safety Levy. Taken together, these incremental changes place significant pressure on the delivery of new homes,” the company said.
The Building Safety levy, which was introduced after Grenfell, is designed to ensure the taxpayer and leaseholders do not pay to fix building safety defects.
“We are working hard in preparing the Building Safety cases required under the pre-start on site Gateway 2 approval process implemented by the new Building Safety Regulator.
“Alongside the rest of the industry, including the G15 group of Housing Associations, we believe a review of this process is necessary to ensure it meets its objectives without incurring further delays to delivery, and thereby supports the Government’s housing ambitions,” Berkeley said.
The FTSE-100 housebuilder added that it remained “hugely encouraged by the change in mindset over planning” and said it “fully supports” the government’s housing ambitions.
However, RBC researcher Anthony Codling said it was “comforting to see Berkeley reverting to type complaining about the pace of regulatory change”.
“In short Berkeley is in track to deliver on its promises, and back to moaning about planning. This is the Berkeley we know and love!” Codling said.
Alongside the warning, Berkley announced a trading update November 1, 2024 to February 28, 2025.
The company reaffirmed its earnings guidance to deliver at least £975m of pre-tax profit across 2025 (£525m) and 2026 (£450m).
“Berkeley reiterated today that it is on track to meet its pre-tax profit guidance… Few housebuilders have the confidence and visibility to make such pronouncements, and in a market punctuated with uncertainty it is easy to see the attractions of investing in the shares of Berkeley Group,” Codling said.
It said there was a “modest improvement” in sales reservations, with sales ahead
of those achieved last year.
“For this improvement to continue and sales rates to return closer to the levels
of three years ago, there needs to be greater confidence in the trajectory of interest rate reductions and wider economic stability,” Berkeley said.