Berkeley Group warns of 'significant pressure' from regulatory changes

Berkeley has upheld its earnings guidance for the 2025 and 2026 financial years

By HARRY WISE

Updated: 09:42 GMT, 14 March 2025

Berkeley Group says the volume of new legal reforms affecting the housing sector is placing ‘significant pressure’ on delivering new homes.

Numerous reforms have been introduced over the past few years to make buildings safer following the Grenfell Tower disaster in 2017.

These have included establishing the Building Safety Regulator, which sets out rules to protect the design and construction of higher-risk properties.

And from September 2025, a new Building Safety Levy will be charged on all new residential developments in England needing building control approval.

The tax is designed to prevent taxpayers and leaseholders from paying the costs of addressing historical property defects.

Concerns: Berkeley Group has expressed worries that the volume of new legal reforms affecting the housing sector is placing ‘significant pressure’ on delivering new homes

Berkeley said it ‘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.’

Despite this, the FTSE 100 firm upheld its guidance to achieve at least £975million in pre-tax profits across the 2025 and 2026 financial years.

It noted enquiries were at ‘consistently good levels,’ while sales reservation rates were currently ahead of last year.

In addition, the company intends to hand out £33million in dividends to investors in a fortnight, having already conducted share buybacks worth £71.3million since its half-year results.

Adam Vettese, market analyst at eToro, remarked: ‘Berkeley’s reaffirmation of its profit guidance signals confidence in its operational model despite a challenging macroeconomic environment.’

However, Berkeley said further sales improvement depended on ‘greater confidence’ in interest rate reductions and economic stability.

The Bank of England has lowered the UK base rate three times since last August, most recently in February, when it cut interest rates by 0.25 percentage points to 4.5 per cent.

However, the chances of another rate decrease in the coming months appear slim, given that the UK inflation rate rose to 3 per cent in the 12 months ending January, above the BoE’s 2 per cent target.

Berkeley Group Holdings shares were 2 per cent up at £36.30 on Friday morning but have shrunk by around a quarter over the past year.

Vettese added: ‘Investors will be hoping to see inflation stay under control so the Bank of England can continue to cut rates and give the housing market a shot in the arm, which in turn should see Berkeley’s share price resume an upward trajectory.’

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Berkeley Group warns of ‘significant pressure’ from regulatory changes

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Berkeley Group warns of ‘significant pressure’ from regulatory changes