London Mayor Sadiq Khan will struggle to meet targets to build 66,000 homes a year in the capital, Berkeley Homes boss Rob Perrins warned on Wednesday.
Perrins, who also said the housebuilding sector needed another 150,000 workers in London alone, made the gloomy prediction as he said other developers were also pulling out of the capital to concentrate on more buoyant markets elsewhere.
The building boss blamed myriad factors for the tougher conditions in London, where housing starts overall are some 30% below two years ago. Higher stamp duty, as well as the “really blunt tool” of mortgage restrictions from the Bank of England have combined with a “slow and bureaucratic” planning system and weaker demand to dent the market, Perrins said.
On Khan’s target, he said: “Statistics show that starts have fallen to 20,000... from what I see on the ground, I don’t see the numbers increasing enough.”
Berkeley posted a 15% jump in pre-tax profits to £934.9 million for the year to April 30, but this represents “peak” profitability as the sites bought more cheaply by the company soon after the crash have been built out.
It upgraded profits for the next two years by £75 million but Perrins added that the firm had held back from investing £400 million due to the uncertainty. “If the conditions were there we would invest that,” he said. The shares dipped 4%, or 180p, to 3957p.
Perrins added that the market was lacking the “feelgood factor” due to the wider Brexit backdrop, which was deterring other builders. “We are committed to London. It’s good for us in one way but bad for London in another way that a lot of the other developers and a lot of the smaller developers are not working in London any more.”
Berkeley, founded by industry veteran Tony Pidgley, employed around 15,000 workers last year although that has dropped to 12,000, throwing up another barrier to lifting housing output. European workers account for half of its site workers. “New people aren’t coming, that is the issue,” he said.