Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Solutions. Read the original article for full details.
Berkeley calls for urgent stamp duty reform with 1% new-build cap proposal
Housebuilder Berkeley has added its voice to growing calls for stamp duty reform, urging the government to make what it describes as "urgent" changes to the tax. In its trading update, the firm said reform was needed if the government is to meet its target of 300,000 new homes per year.
Berkeley argued that the current stamp duty regime was introduced when interest rates stood at 0.25%, and that what was once a "manageable frictional cost" had become a "binding constraint" now that rates have returned to a normal level.
What Berkeley is proposing
The housebuilder has put forward "targeted intervention" for the new-build sector, comprising two measures: a 1% stamp duty cap for first-time buyers and downsizers, and the removal of the 5% investor surcharge.
According to Berkeley, these changes would collectively support people buying their first home, free up more family homes and provide more homes for rent. The firm said increasing transactions of all kinds would drive significantly higher rates of housing delivery across all tenures, including affordable housing delivered alongside new private homes that would otherwise not come forward.
Berkeley also claimed that far more tax revenue is being lost through depressed activity than is being gained through stamp duty land tax on new-build homes, citing HMRC's own assessment. It noted that the Office for Budget Responsibility has historically estimated that for every 1% cut in stamp duty land tax, transactions may increase by up to 6%.
Market conditions and buyer caution
Berkeley said it would continue to operate within its four-year £1.4bn pre-tax profit plan, with fluctuations driven by market demand. It anticipates pre-tax profits to be slightly weighted towards the first half of the current financial year, subject to the timing of completions.
The firm warned that some buyers might delay transactions until after the Autumn Budget and once election uncertainty fades. It said the Middle East conflict and political change in the UK had impacted the housing market, but that it was still receiving "good and stable levels of enquiries", suggesting people not yet ready to move were more cautious to commit.
Wider calls for reform
While the Prime Minister has firmly ruled out a change to the tax in the upcoming Autumn Budget, Berkeley is not alone in its position. Bellway, Yorkshire Building Society, Rathbones and Family Building Society have all made the case for stamp duty reform.
For letting agents and inventory clerks, the proposed removal of the 5% investor surcharge matters most: Berkeley argues it would provide more homes for rent, and could shape future supply in the private rented sector if adopted.
Source: Mortgage Solutions