Berkeley Group has stated London will "fall well short" of its new homes targets due to the cost of stamp duty.

In a trading update, the house builder slammed Government housing policy by stating high transaction taxes are "restricting mobility" in the second hand market as well as the supply/delivery of new homes in London and the South East.

While it was still on course to deliver £2 billion of pre-tax profit by April 2018, the developer said Government housing policy has had a detrimental impact on London.

"What is increasingly clear is that Government policy, which has been helpful outside London, has had a negative effect on the capital," Berkeley said.

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"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.

"While these challenges persist, and the barriers to entry for small builders remain high, London will fall well short of its targets for new homes. This is not just a problem for business and ordinary people in the capital but for the country as a whole.

"London is the engine of our national economy and the principal driver of fiscal revenues.  So this is not just a question of housing Londoners - important though that is. It poses a risk to deficit reduction and the prosperity of the whole country."

(LM/CD)