Stamp duty reform is ‘urgent,’ Berkeley tells Burnham
Berkeley has urged Andy Burnham to commit to “urgent reform” to stamp duty, which it says has become a “binding constraint” on housebuilders and buyers.
The FTSE 250 firm said that stamp duty is to blame for the slump in demand for new homes, because it makes first-time-buying unaffordable and dissuades existing homeowners from moving again.
“Far more tax revenue is being lost through depressed activity than is being gained through [stamp duty] on new build homes as set out by HMRC’s own assessment,” Berkeley said.
The housebuilder says the government should cap stamp duty at one per cent for first-time buyers and Brits who are moving into smaller homes, and remove the five per cent investor surcharge.
“Collectively, this supports people buying their first home, frees up more family homes, and provides more homes for rent,” the firm said.
Berkeley said drastic reform to stamp duty, which is charged on property transactions, is vital for Labour to meet its much-questioned target of building 1.5m homes by the next election.
The housebuilder said stamp duty was introduced when interest rates were at 0.25 per cent, pointing out that rates have since risen to 3.75 per cent.
“What was a manageable frictional cost when interest rates were at those unique and unsustainable levels, has become a binding constraint, now that interest rates have returned to more normal levels,” the group said.
Iran war impacts ‘worse than thought’
The Surrey-based business said it is “encouraged” by the Prime Minister’s “recognition of the importance of home-building in driving economic growth across the nation”.
“New housing presents a tremendous opportunity for the Government. It provides skilled jobs, apprenticeships, economic growth and much needed homes, all while contributing huge amounts of tax in the context of stretched public finances.”
Berkeley has become the latest of a string of housebuilders to urge the government to take action to unblock demand for housing, as the sector battles with rising costs caused by the Iran war.
Bellway, Barratt Redrow and property portal Rightmove have each called for urgent action on stamp duty.
Berkeley told shareholders on Friday that the impacts of the Iran war on its housing output and balance sheet are set to be worse than previously thought.
In April, the housebuilder cut its construction targets by 25 per cent in favour of a focus on cash generation, in a bid to guard against “the deterioration in the economic outlook that accompanied the emerging conflict in the Middle East”.
“Since the start of the current financial year, with the conflict continuing for longer than initially anticipated and ongoing political change and uncertainty in the UK, sentiment and core economic indicators have been further impacted,” the group said.
Shares in Berkeley were broadly unchanged on Friday morning at 2,296p.