Berkeley's share price fell by more than 17% shortly after markets opened on Wednesday, according to multiple reports. The company will deliver a £450m pre-tax profit at the end of this financial year, and it has around £300m in net cash, major media sources indicate. This financial position comes amid a broader strategic overhaul. Berkeley announced a 'Berkeley 2035' strategy to shield against external factors, which includes halting new land investment. The company does not believe it can make its required rate of return on investment in new land acquisitions due to the continuous increase in the tax and regulatory burden on residential development, according to its official statements. Berkeley said the new process has lengthened the time between obtaining planning approval and starting on site by about 12 months, a major media report notes. Berkeley will stop buying new land, implement a hiring freeze, and employ fewer subcontractors, a major media report notes. The specific new regulations or tax increases most impacting these decisions remain unclear, as does the exact timeline and key milestones for the 'Berkeley 2035' strategy.
Market conditions have been heavily influenced by the Iran war, which Berkeley said is weighing heavily on market confidence and could push up inflation. The conflict could reduce confidence in a near-term market recovery because of the prospect of interest rate hikes, multiple reports indicate. Average mortgage rates in the UK have flown past 5% since the start of the Iran conflict, according to a major media source. Housebuilding firms have seen their shares jitter in recent weeks as a number of leading companies warned that the Iran war is making the property market more volatile, a report states.
This hugely positive activity for the economy and society requires considerable upfront capital investment which in turn requires a stable, predictable and supportive operating environment.
The industry context shows broader struggles. London has only achieved 10% of the government's housebuilding target for the city, as part of Labour's plans to build 1.5m homes by the next election, a major media report says. Berkeley welcomed the government's approval of the 'Homes for London' package, which loosened planning rules in the capital to stimulate housebuilding, according to a source. Last month the rival housebuilders Barratt Redrow and Persimmon were the worst performing stocks across the FTSE 100, with both businesses losing more than 20% of their value, a report indicates.
Operational adjustments are underway at Berkeley. The company said the pace of its construction work on existing sites would be slowed down to match market demand and regulator approvals, a major media source reports. Berkeley paused housebuilding to protect its balance sheet against an unprecedented increase in cost and regulation, according to a report. The company has enough land for 50,000 homes, with a further pipeline for another 10,000 homes, in London and the south-east, a source states. How many staff will be affected by the hiring freeze and reduction in subcontractors is not specified, nor is the financial impact of the land investment halt.
Recent years have seen an unprecedented increase in cost and regulation, at a time of increasing interest rates and faltering consumer confidence, amidst prolonged geopolitical and macro-economic volatility and uncertainty.
Sales performance has seen modest increases in recent years, Berkeley said, according to multiple reports. The full details of how regulatory impacts will shape the company's long-term strategy remain to be seen.
In this environment, Berkeley does not believe it can make its required rate of return on investment in new land acquisitions.
This is due to the continuous increase in the tax and regulatory burden on residential development, which other land uses do not experience, allowing them to pay higher land values.
In the first two months of 2026, we had begun to see signs of a modest recovery in sales volumes. However ... recent geopolitical events and the macroeconomic consequences, including reduced potential for further rate cuts, could reduce confidence in a near-term market recovery. This has now become a reality.