Berkeley Group has paused all land acquisitions, citing rising costs, tighter regulation and weakening buyer demand, in a move that underlines the challenges facing the government’s housebuilding targets.
In a trading update, the London-focused developer said it was adjusting its strategy to reflect current market conditions, adding that expectations of a recovery had been undermined by geopolitical tensions, including the conflict in Iran, and the wider economic impact, such as reduced scope for further interest rate cuts.
Shares fell sharply following the announcement, despite the company maintaining its guidance for pre-tax profits of £450m for the year to 30 April. The builder said the combination of higher costs, increased regulation and weaker confidence had made it harder to justify new land investment without greater certainty over the operating environment.
Berkeley said it does not expect to achieve its required returns on new land acquisitions under current conditions, citing rising taxes and regulatory costs on residential developments that other land uses do not face. The company added that where residential land transactions have occurred, prices have been overheated, making new purchases uneconomic.
As a result, Berkeley will not acquire new land while these conditions persist, except through joint venture arrangements, and will focus on developing its existing land holdings, the company said. The move follows a slowdown in acquisitions, with just three new sites bought over the past three years.
Berkeley currently holds a land bank sufficient for 50,000 homes, with a further pipeline of more than 10,000. Construction on existing sites will be slowed to align with current sales levels and the pace of approvals from the Building Safety Regulator.
The announcement comes shortly after housing secretary Steve Reed and the mayor of London Sadiq Khan unveiled an emergency “Homes for London” package aimed at reviving stalled housebuilding in the capital. Measures include reducing the affordable housing requirement for fast-track planning from 35% to 20% and temporary relief from the Community Infrastructure Levy for schemes meeting affordable housing targets.
Berkeley said it welcomed the package but stressed that its success depends on pragmatic and flexible implementation by local authorities to provide homebuilders with the certainty needed to restart regeneration projects.
Housing starts in London have fallen sharply over the past year. Analysts at Molior report that only 3,248 homes began construction in the first nine months of 2025 – just 11% of the recent average and under 5% of the government’s target for the capital.
Despite the challenges, Berkeley said it will continue to target an operating margin within its historic range of 17.5% to 19.5% and expects to deliver more than £1.4bn in pre-tax profit over the next four years to 2030.
