Home building Stand-off with Government as BTL falls

by Property 118

3 months ago

Home building Stand-off with Government as BTL falls

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Home building Stand-off with Government as BTL falls

The Berkeley Group, one of the UK’s largest home builders, has said that despite government pressure it is unable to ramp up house production.

Prime Minister Theresa May has told builders to “do their duty to Britain” and that she wanted “to see planning permissions going to people who are actually going to build houses, not just sit on land and watch its value rise.”

However, the Berkley Group have defended their position with one of the factors slowing new construction being the fall in demand from new Buy to Let investors caused by the increase in Stamp duty for second homes and mortgage interest relief restrictions under Section 24 rules.

This reduces the level of upfront landlord finance available to builders for new developments and is a real life example of how the PRS assisted home building instead of the misconception that landlords were stealing properties from under the noses of potential first time buyers.

They also listed the high cost of moving house, economic uncertainty and a limit of mortgage lending as further constraints to its ability to increase production levels as demanded by the Government.

Berkeley said: “These factors, together with the changing planning environment and the time and complexity of getting on site following planning approval, mean that Berkeley is currently unable to increase production beyond the business plan levels.”

“Berkeley remains cautious in its investment strategy, acquiring land selectively in the trading period, and anticipates cash flow will be broadly working capital neutral over the course of the year as a whole, subject to any large land transactions that might arise before 30 April 2018.”



Comments

Peter Hellawell

3 months ago

Let us hope to see many construction firms stating these facts so the government understand these policies are not working.

Luke P

3 months ago

Reply to the comment left by Peter Hellawell at 19/03/2018 - 11:52
This needs highlighting to the newly-appointed Homelessness Minister, Heather Wheeler, following today's Guardian article titled: "I don’t know why rough sleeper numbers are up" as one of the reasons.

https://www.theguardian.com/society/2018/mar/18/homelessness-minister-heather-wheeler-rough-sleeping-housing-first

Ken Smith

3 months ago

The Whitehall bods simply think all their visionary strategic planning will fall into place nicely.

This article is a great example of it not happening as hoped in the real world - but also brings into play the lack of BTL interest too - and the issues that throws up too.

So many sectors of society have benefitted from Landlords' efforts up to now. Government, builders, material suppliers, agents, solicitors, oops - nearly forgot - those who cant manage to, or dont want to buy a house too!

Wait until more of these types of stories start to hit the headlines.

Interesting times ahead.

Collateral damage first. Then a rethink? So disappointing and inept on the part of the government. Our warnings fell on deaf ears. Indeed watch this space.

Monty Bodkin

3 months ago

I've not built, converted or brought back into use one single unit since Osborne's anti-landlord budget in 2015.
BTL properties don't 'just disappear', they don't even get built in the first place.

Dr Rosalind Beck

3 months ago

Just sent the email below to Heather Wheeler. If anyone wants to follow suit, here is her email address: heather.wheeler.mp@parliament.uk

Dear Ms Wheeler
I write regarding your article in the Guardian regarding why the problem of homelessness is on the increase. You will find a key reason in Berkeley Group's decision this week to not 'ramp up' house-building - namely, the lack of upfront finance coming from private landlords which has underwritten much house-building for decades. And you will see the reason for the latter in the Government's fiscal attack on landlords. I have outlined this in my report, which you might like to read. It is here:

https://www.property118.com/wp-content/uploads/2016/10/6G0YKMd1Wf.pdf

If you look at the case studies in the report, you will see how landlords who have catered for the lowest-paid are now having to seek tenants with greater means, in order to pay tax on fictitious profit (the finance interest - often landlords' highest cost - has been redefined by sleight of hand as profit to be taxed). This process has been found by the LSE as particularly marked now in London, where yields and margins are often very low. Where do you think the evicted tenants will go? And this will only get worse unless 'Section 24' - slated as 'plain wrong' by Paul Johnson at the IFS, and as totally unfair by the Institute of Chartered Accountants of England and Wales and by the Institute of Economic Affairs amongst others - is reversed.

Yours sincerely
Dr Rosalind Beck

Rod

3 months ago

Re' homelessnes, I've said it before. Giving housing benefits direct to tenant = they drink it away = no rent = eviction = Homelessness = reduced claims for housing benefit = big government savings !!! Why else has it shot up? Simple!

Michael Barnes

3 months ago

Reply to the comment left by Dr Rosalind Beck at 19/03/2018 - 13:42
Nicely put.

Richard Mann

3 months ago

Is it not like some sort of bad joke.
The £80 billion pound question that should be asked regarding homelessness or inadequate property availability is
How could this government be instrumental in the continuous assault on the PRS sector to the tune of a £80 billion or a 80% reduction of investment over a scant two year period and not expect some repercussions in the system.
In just 24 months investment in BTL has dropped by a jaw dropping £80 billion !
Mainly down to section 24 plus a raft of unexplainable attacks on private landlords
Thank you Gideon Osborne

Michael Barnes

3 months ago

I have searched on-line but I cannot find the original statement, only articles that quote from it.

Can anyone provide a link to the original statement?

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