UK housebuilders will need government support, says Berkeley

The Development Lobby in action – Owl keeps drawing attention to how developers occupy, and have occupied for years, key positions in the local Local Enterprise Partnerships and the newly emerging promotional organisations such as “The Great South West” (and one or two that have fallen by the way).

Mark Sweney www.theguardian.com 

Berkeley has said the housebuilding and construction industry will need government support, including a simplification of the planning process, if it is to play a leading role in helping the British economy recover from the coronavirus.

Rob Perrins, the chief executive of the FTSE 100 housebuilder, said the government would need to intervene to kickstart growth.

“Housebuilding and construction can play a vital role in the broader economic recovery following Covid-19,” Perrins said as Berkeley announced its full-year results on Wednesday.

“This will require government support, similar to that seen following the 2008-09 financial crisis, including: the reversal of the property tax increases seen since 2014, a reduction in the bureaucracy and cost of planning, and direct investment into affordable housing.”

UK housebuilders have benefited from government support in recent years because of the help-to-buy scheme, which subsidised the acquisition of new-build homes and boosted profits at companies such as Persimmon and Taylor Wimpey.

While many firms in the sector have tapped the government’s wage support and loan schemes in recent months, Berkeley said it had not had to turn to the government’s furlough programme or its Covid corporate financing facility.

Berkeley said on Wednesday it would stick to its plan of providing £280m a year to shareholders until 2025, with the next £140m payment still on track for September. However, a planned return of £455m of surplus capital has been deferred for up to two years because of the pandemic.

The company, which operates mainly in London, Birmingham and the south-east of England, said in the year to the end of April it built almost 3,000 homes, including about 10% of London’s new private and affordable homes. Berkeley said it supported about 32,000 jobs, directly and indirectly.

It reported a 35% fall in pre-tax profits in the year to the end of April, from £775m to £503m. The company said it had been on track to meet its profit guidance of £550m before the lockdown but revised that down to £475m at the end of March. 

“Berkeley therefore surpassed its initial expectation in this regard,” the company said. It maintained its target of an average annual profit of £500m through to 2025.

“We now anticipate profit delivery in the coming year to be weighted towards the second half in an approximate one-third to two-thirds ratio,” the company said. “This does assume no further significant disruption from a second wave of Covid-19 or a disorderly end to the Brexit transition period.”

Production capacity dropped about 40% as the UK went into lockdown and is now back up to about 80%. Sales in April and May were 50% below normal market conditions.

 

5 thoughts on “UK housebuilders will need government support, says Berkeley

  1. Major developers do not supply the homes the country needs,that much is evident. All that happens is corruption increases, the developers become richer: they have far too much control over our housing and planning. We need more houses built by government/ councils so to provide housing that gives security of tenure, to allow people to live healthier and happier lives. The country would benefit from a healthier population.

    Bad housing is responsible for poor physical and mental health and takes away hope for many people, particularly the young and the vulnerable. The pandemic has demonstrated how inequality in housing, overcrowded living conditions has affected the spread of the virus.

    Now is the time to put the real housing needs of the country before the greed of the developers and many politicians. We cannot continue to let the developers dictate. By building council/ government housing, rents would be fairer and the country would not be paying out massive amounts of housing benefits which also goes into the hands of rich landlords.

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  2. 1. The major house builders have been making massive profits for years. If they didn’t keep any back in reserve for tough times, that is their problem.

    2. By sitting on the massive land banks which represent the majority of available building land, they are: A) Locking out smaller builders; and B) cornering the market and artificially inflating house prices.

    So I say, let the big house builders go bust – if their penury is actually real – and have a fire sale of the land banks. THis will kick start a new age of small independent builders, and likely to create a greater level of economic growth than bailing out the big housebuilders.

    HOWEVER – since developers are BIG, BIG, HUGE, BIG, ENORMOUS, GIGANTIC – indeed BIG – donors to the Conservative Party, not to mention good mates with lots of Ministers and MPs, and given the existing track record of subsidies and pandering to them, does anyone really think that they will NOT be given even more huge bailouts / subsidies??? Corruption in name if not in legal terms.

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  3. Let’s build council housing please. With a secure, long-term tenancy and the stability of locally affordable rent, a social home provides the security and opportunity to put down roots and plan for the future.
    Liz Pole, Devon Labour Party Liz@LizForLabour.org

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    • Corporate housing developers make £70,000 profit on each home. There’s also an intangible transfer of public environmental goods into landowner and developer private pockets when homes are built on green fields. Subsidizing corporate developers is not the way to spend the British public’s wealth.

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