Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Strategy. Read the original article for full details.
Berkeley Group urges government to cut stamp duty ahead of October budget
Berkeley Group is pressing the government to reform stamp duty as cautious buyers keep housing demand subdued in the run-up to October's budget. The company says the current regime, introduced when interest rates stood at 0.25%, now requires urgent reform.
What Berkeley is asking for
In its latest trading statement to the City, Berkeley urged the government to consider a targeted intervention to support the new build sector, comprising three measures:
- Cap stamp duty land tax (SDLT) at 1% for first-time buyers
- Cap SDLT for downsizers at 1%
- Remove the 5% investor surcharge
Berkeley said these measures together would support people buying their first home, free up more family homes and provide more homes for rent. It argued that increasing transactions of all kinds would drive significantly higher rates of housing delivery across all tenures, including affordable housing delivered alongside new private homes.
The case for reform
Berkeley said that to meet the government's target of 300,000 new homes per annum and help address the cost-of-living crisis by making homes more affordable, the stamp duty regime needed urgent reform. The company argued that what was a manageable frictional cost at uniquely low interest rates has become a binding constraint now that rates have returned to more normal levels.
It also claimed that far more tax revenue is being lost through depressed activity than is being gained through SDLT on new build homes, citing HMRC's own assessment. Berkeley noted that the Office for Budget Responsibility has historically estimated that for every 1% cut in SDLT, transactions may increase by up to 6%.
Planning reforms and delivery
On supply, Berkeley said it fully supports the government's planning reforms in London and that the priority now is implementation. It pointed to the Homes for London package and the updated National Planning Policy Framework as designed to reduce regulatory cost, speed up the system and get stalled sites into construction, which it described as essential prerequisites to kick-start supply on brownfield sites.
The housebuilder said it was making good progress advancing its sites through the reformed planning system to secure deliverable and viable planning consents, but added that more consistency is needed, with the pro-development stance seen in policy making also adopted in decision making.
Wider industry pressure
Berkeley is not alone in its call. Fellow housebuilders Bellway and Barratt Redrow have also recently called for lower stamp duty and government help for first-time buyers.
For letting agents and inventory clerks, the proposed removal of the investor surcharge is the point to watch. Berkeley argues it would provide more homes for rent and increase transaction activity across all tenures.
Source: Mortgage Strategy