Berkeley, Tony Pidgley’s housebuilder, lashed out at the Government’s stamp duty tax rises yesterday as sales fell and investors dumped the shares.
The stock has fallen 13 per cent so far this year, and 5 per cent of its shares are on loan with hedge funds including Odey Asset Management – in effect taking a £200m-plus bet against the company.
The share price slipped another xxp to close at xxp yesterday as Berkeley – founded by Mr Pidgley 40 years ago – revealed that sales fell 4 per cent between November and February compared with the same period in the previous year. It continues to struggle at the top end of the market with just 62 properties sold for more than £2m – showing no signs of improvement on the market slowdown in the run-up to last year’s general election.
Berkeley insisted that underlying demand “has remained strong” despite uncertainty caused by factors such as the impending EU referendum. But it criticised reforms to stamp duty enacted in December 2014 for raising the bill on homes worth more than £937,500 and creating “one of the world’s highest property taxation regimes”.
The tax turmoil could stop people moving and deter development, the builder said, adding: “Transaction levels at the upper end of the housing market have been affected by the significant increase in transaction taxes over the past 18 months, which will have effects on both social mobility and the supply of new homes.”
Despite these concerns, Berkeley added that full-year profits will be at the top end of expectations – around £526m, compared with a City consensus of £509m. It also remains on course to make £2bn in profits in total by the end of its 2017-18 financial year as luxury projects in the capital complete and it shifts more of its building outside London.
Analysts said short-sellers could be burnt as fears of an over-supplied market in south London were overplayed, with Berkeley having sold all the flats in its Riverlight scheme in Nine Elms. Jefferies’ Anthony Codling said: “Berkeley still has developments in the Battersea area but it is not a pure play. Nor does it have significant exposure to the markets causing some to be concerned.”