Berkeley Group has called on the Government to slash stamp duty for first-time buyers and downsizers and scrap the 5% surcharge on property investors in an attempt to boost housing transactions and new development.

The housebuilder wants stamp duty capped at 1% for first-time buyers and people downsizing, alongside removal of the additional dwelling surcharge paid by investors.

Berkeley argued that the current stamp duty regime has become a “binding constraint” on the housing market as higher interest rates have added to the cost of buying.

Its intervention came as the developer reported that buyers without an immediate need to move are remaining cautious amid economic and political uncertainty.

BUYERS HOLDING BACK

Berkeley said it continues to receive “good and stable” levels of enquiries, but volatility means customers without readily available liquidity or an immediate need to move are more reluctant to commit.

It also expects some buyers to defer transactions until after the Budget at the end of October and election uncertainty has dissipated.

The group had already announced in April that it would reduce production by around 25% over four years following a deterioration in the economic outlook.

It nevertheless remains within its four-year plan to generate £1.4 billion of pre-tax profit.

‘A BINDING CONSTRAINT’

In a trading update this morning Berkeley said: “To meet the Government’s target of 300,000 new homes per annum, and help address the cost-of-living crisis by making homes more affordable, the current stamp duty (“SDLT”) regime, that was introduced at a time when interest rates were 0.25%, requires urgent reform.

“What was a manageable frictional cost when interest rates were at those unique and unsustainable levels, has become a binding constraint, now that interest rates have returned to more normal levels.

“Far more tax revenue is being lost through depressed activity than is being gained through SDLT on new build homes as set out by HMRC’s own assessment. The OBR has historically estimated that for every 1% cut in SDLT, transactions may increase by up to 6%.”

1% RATE FOR FIRST-TIME BUYERS

Berkeley has proposed three specific changes to the Government: capping stamp duty at 1% for first-time buyers, applying the same 1% cap to downsizers and removing the 5% investor surcharge.

It argued the measures would support people buying their first home, encourage older homeowners to release larger properties onto the market and increase the availability of homes to rent.

Berkeley said: “Collectively, this supports people buying their first home, frees up more family homes, and provides more homes for rent.

“Increasing transactions of all kinds will facilitate significantly higher rates of housing delivery of all tenures, including the critical affordable housing that is delivered alongside new private homes, and that would otherwise not come forward.”

PLANNING REFORMS

Berkeley also backed the Government’s planning reforms in London, including the Homes for London package and updated National Planning Policy Framework, but said the priority is now implementation.

It said: “Berkeley is making good progress advancing its sites through this reformed planning system, to secure deliverable and viable planning consents. However, we still need to see more consistency, and the pro-development stance seen in policy making also adopted in decision making.”