Britain’s housing market is showing little sign of a decisive recovery, with buyers continuing to hold back ahead of next month’s Budget and major housebuilder Berkeley Group calling for
sweeping changes to property taxation.
Berkeley, one of Britain’s largest residential developers and a major builder across London and southern England, has urged the government to reduce the tax burden on home purchases, arguing that high transaction costs are discouraging people from moving and worsening shortages across the housing market.
The company wants stamp duty rules to be overhauled, including a maximum 1% rate for first-time buyers and people downsizing from larger properties. It also called for the removal of the additional 5% stamp duty charge imposed on property investors.
Berkeley argues that lowering the tax burden could have wider effects than simply helping individual buyers. In its view, making it easier for first-time purchasers to enter the market would help unlock existing housing stock, while encouraging older homeowners to downsize could release larger family homes and increase the availability of rental properties.
The intervention comes as Britain’s housebuilders confront one of the most difficult trading environments in years. Rivals including Bellway and Barratt Redrow have likewise pressed for lower stamp duty and stronger measures to support first-time buyers, highlighting the growing concern within the industry over affordability and weak demand.
Yet the government has so far shown little appetite for such a move. Prime Minister Andy Burnham ruled out cutting or abolishing stamp duty in the October Budget in comments earlier this year, leaving developers and potential buyers facing continued uncertainty over the direction of housing policy.
Buyers remain reluctant to commit
Berkeley said interest in its developments remained at stable levels, suggesting that underlying demand has not disappeared. The problem is that many potential purchasers are unwilling to turn that interest into completed transactions.
Customers who do not have an immediate need to move, and those without substantial cash resources, are continuing to delay buying decisions. The cautious behaviour reflects a combination of affordability pressures, uncertainty over government policy and broader economic concerns.
The weakness is also affecting the supply side of the market. British housebuilders have reduced land purchases and moderated construction activity as they respond to softer demand, rising costs and a less predictable economic environment.
Residential construction has consequently become one of the areas contributing to the broader contraction in Britain’s construction industry.
Berkeley said political developments in Britain and the continuing conflict in the Middle East had further weakened consumer confidence and housing-market sentiment. The company warned that these pressures were weighing on both trading conditions and overall market activity.
Despite the challenging backdrop, Berkeley remains committed to its financial ambitions. The group is targeting £1.4 billion in pre-tax profit over the next four years and expects earnings to be somewhat weighted towards the first half of its current financial year.
The company’s latest call for tax reform therefore reflects a broader concern within Britain’s property industry: without stronger buyer confidence and lower barriers to transactions, demand may remain subdued even where there is significant underlying interest in new homes.
For the government, the debate presents a difficult policy choice. Cutting stamp duty could stimulate transactions and improve housing mobility, but it would also reduce tax revenues at a time when ministers face pressure to maintain fiscal discipline.
For housebuilders, however, the message is increasingly clear: until buyers feel confident enough to act, Britain’s housing market is likely to remain constrained by a combination of high costs, political uncertainty and cautious consumer behaviour.
