Planning reforms have had ‘profound and hugely positive impact’, Berkeley says
FTSE 100 house builder Berkeley said it was on track to meet its profit targets in 2025 as it announced a new investment strategy to help capitalise on the government’s planning reforms.
The government has committed to building 1.5m new homes over the course of the parliament. To meet its target, ministers are consulting on major reforms to the UK’s planning system.
Berkeley said the government’s approach has had a “profound and hugely positive impact on the planning system, lifting the tone and encouraging a proactive approach to unblocking housing delivery at scale.”
“We are now working closely with all levels of government to ensure that this positive momentum quickly translates into economically viable planning consents to unlock greater investment and delivery on the ground, but this will take time,” the firm added.
Berekely said it wants to “play its full part” in addressing the housing shortage and announced a new 10-year strategy investment this morning.
The firm has identified £7bn of its free cash flow to be deployed over the next ten years. Of this £2.5bn will go towaards investment into new land and bringing pipeline sites into delivery.
A further £1.2bn will go to set up its Build to Rent platform while another £2bn will go to shareholder returns. The remaining £1.3bn was assigned to ‘flexible allocation’.
“Adopting this strategy at this point in the cycle will result in Berkeley investing more in the near-term to drive higher profits and returns to shareholders in the long-term,” Rob Perrins, the firm’s chief executive said.
The comments came as the housebuilder’s pretax profit fell 7.7 per cent in the six months to October, falling to £275m from £298m in the same period last year.
Sales during the period were consistent with run rates last year, although there has been a “slight improvement” over the past two weeks. The firm said sales prices were “resilient” while build costs were “stable”.
“Market conditions have been stable during the period, supported by the systemic undersupply of new homes in London and the South-East, strong employment levels and recent wage growth, alongside a supportive mortgage market,” the firm said.
Looking forward, it said it remained on track to deliver a profit of £525m for the full year and at least £450m for the 2026 financial year.