Looming EU vote hits reservations at builder Berkeley

Berkeley said the EU vote has had a 'dampening' effect. Picture: Christopher Furlong/Getty Images
Berkeley said the EU vote has had a 'dampening' effect. Picture: Christopher Furlong/Getty Images
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Upmarket housebuilder Berkeley has blamed a 20 per cent fall in home reservations on consumer concerns about a possible British withdrawal from the European Union.

Berkeley said higher property taxes were also depressing the top end of the market. It sold off a large number of its developments in 2013 and 2014, which meant that no new schemes were launched in the first five months of this year.

Reporting results for the year to April, managing director Rob Perrins said underlying interest remained good, with prices for properties at “more mainstream” levels still rising.

However, he said the market had lost its momentum, particularly at the upper end. Berkeley, which focuses on London and the south east of England, said in a statement: “Global macro uncertainty and the impending EU referendum have had a dampening effect on investment levels across all businesses and this is likely to continue up to and immediately after the result of the referendum.”

READ MORE: EU referendum: Scottish economy ‘would be damaged by Brexit’

The news adds to evidence that Brexit fears are stifling parts of London’s luxury housing market, which has already been cooling due to stamp duty changes that have made it more expensive to buy homes above £937,000. Berkeley, which recently signed an open letter in favour of Britain remaining in the EU, reported a dip in annual revenues as a higher number of completions was not enough to offset a fall in selling prices. This fell to an average of £515,000 against £575,000 previously.

This was partly due to the mix of homes sold as focus shifted to include more student developments and fewer high-end properties.

Pre-tax profits were 2 per cent lower at £531 million, which analysts at UBS described as slightly ahead of expectations.

READ MORE: Construction sees April rebound but sector still sluggish

Berkeley also raised its annual dividend by 10 per cent to £1.90 per share, and announced a £1 per share special dividend in line with its long-term plan to return cash to shareholders.

The company is preparing to launch a number of new schemes, including a new design concept called Urban House. This gets twice as many homes into a site compared to traditional terraced housing by replacing the back garden with a roof garden.

“At a time when the demand for family homes in London outstrips supply by 13 to one, Urban House offers an intelligent, traditional three-storey solution full of light, economical to run and works well as private or affordable housing,” Berkeley said.