House builders Warn on London Property Market Berkeley Group says London will fall "well short" of new home targets while Redrow blames Stamp Duty for rising costs

House builders have warned of the impact of rising costs on London's property market while reporting mixed fortunes in the wake of the Brexit vote.

In a trading statement ahead of its AGM today Berkeley Group said reservation activity for new homes remained 20% down on last year - reflecting fewer available homes and market uncertainty.

A 30% fall in its share price since the 23 June referendum has seen it relegated from the FTSE 100. It remains 16% down.

The company said while it was on course to deliver £2bn in profits over the three years to April 2018, it joined rival Redrow - which is less exposed to London - in pointing to challenges ahead for the UK's most expensive market.

Berkeley said: "What is increasingly clear is that Government policy, which has been helpful outside London, has had a negative effect on the capital.
"Transaction taxes are now too high and this is restricting both mobility in the second hand market and the pace of supply and delivery of new homes in London and the South East.

"There is also a tension between the national policy on Starter Homes and the London Mayor's ambition to build more affordable housing, while the very high rates of the Community Infrastructure Levy adopted by local authorities now pose a significant threat to development viability."

A lack of new housing has been blamed for stoking property prices - leaving them unaffordable for many in the capital where demand for homes remains high.official figures show average prices of £472,000 for London and a market growing at an annual rate of more than 12%.

In its annual results Redrow blamed a slowdown in London activity on Stamp Duty rises, which were largely designed to deter buy-to-let landlords buying-up properties. It reported a 23% rise in pre-tax profits to £250m in the year to 30 June - with legal completions up 17% on the previous 12 months.

Redrow said "Our growth in output has benefited from the Government's Help to Buy scheme which has continued to be a major support, not only to Redrow, but to the industry as a whole." The company said it planned to expand building in the current year.

But commenting on London, chairman Steve Morgan added: "Activity in this section of the market remains sluggish; however, Redrow's exposure is very limited and all other areas in which we operate, including Outer London, have shown strong growth.

"We have seen very little impact as a result of the Brexit vote."