Shares slump on news as housebuilder says impact of Middle East war, falling consumer confidence and effect of building safety regulations behind announcement
Housebuilder Berkeley has said it is putting the brakes on buying new land and will instead concentrate on its existing 50,000 homes landbank.
In an unscheduled update this morning, the firm pinpointed regulatory burdens and costs, as well as reduced confidence in a near-term market recovery for issuing a rethink on strategy.
Its announcement to investors said: “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.”
It added: “In the first two months of 2026, we had begun to see signs of a modest recovery in sales volumes. However, we indicated in our trading update, that 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.
“We are today announcing decisive action to maximise long term shareholder value by prioritising value creation from our existing land holdings, tightly sequencing construction, flexing the pace of BTR investment and maintaining disciplined capital allocation while continuing shareholder returns.”
It also said the new gateway process was still not working effectively enough despite the regulator saying the system was improving.
It added: “The implementation of the Building Safety Regulator’s new gateway process for building approval has lengthened the time between obtaining planning approval and starting on site by around 12 months. The system is yet to operate effectively and predictably, further impacting the timeline for the delivery of new developments.”
Berkeley said it will now slow down work and added: “With the ongoing conflict and deterioration of the economic outlook, we are reducing work in progress investment to match the sales levels we are currently achieving.
“Our business plan is based on this economic outlook and we believe that it is in the best interests of shareholders to adapt our approach in this way, rather than pursue short-term profit targets.”
It said that for its BTR business Berkeley Living “we remain firmly committed to our strategy to deliver 4,000 BTR homes by the end of FY35 and will review phasing of the second tranche of schemes on an ongoing basis”.
Berkeley said it expects to deliver more than £1.4bn of pre-tax profit over the next four years, adding that operating margins would be in the 17.5% to 19.5% range.
Shares in the company slumped by almost 18% on the news in early trading despite an assurance that pre-tax profits for the year to 30 April will be in line with guidance at £450m.
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