Berkeley Group to reinstate £280 million of shareholder returns

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Sep 4, 2020
  • Berkeley Group to reinstate £280 million of shareholder returns.
  • The property developer reports a 20% decline in underlying sales reservations.
  • Britain’s CMA launches investigation against housebuilders over leasehold contracts.

In an announcement on Friday, Berkeley Group (LON: BKG) said that the first four months of the current fiscal year had seen robust trading, on the back of which, the company expressed plans of reinstating £280 million of shareholder returns.

The British property developer that primarily operates in Birmingham, London, and the South of England reported a 20% decline in its underlying sales reservations in the four months that concluded on 31st August.

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Berkeley’s performance in the stock market

Shares of the company were reported almost flat in premarket trading on Friday. On market open, however, the stock jumped about 2% to hit an intraday high of £47.17 per share. In June, Berkeley Group had reported a 35% annualised decline in its annual pre-tax profit due to the Coronavirus pandemic that has so far infected more than 335 thousand people in the United Kingdom and caused a little under 42 thousand deaths.

On a year to date basis, Berkeley Group is now roughly 5% down in the stock market. In March when COVID-19 restrictions brought the UK’s housing market to a near halt, the company had slid to as low as £31.31 per share. Trading stocks online is easier than you think. Here’s how you can buy shares online in 2020.

At the time of writing, Berkeley Group has a market cap of £5.93 billion and a price to earnings ratio of 15.04.

Britain’s CMA launches investigation against housebuilders

In related news, Britain’s Competition and Markets Authority (CMA) launched an investigation on Friday into Countryside Properties, Taylor Wimpey, Persimmon Homes, and Barratt Developments over leasehold contracts.

The watchdog said that the UK’s largest four housebuilders might have been involved in potential mis-selling and high ground rents that breach consumer protection law. Following the announcement, shares of Barratt were reported 1.4% down in the stock market, Persimmon 1.3% down, and Taylor Wimpey 0.3% down.

Housing Minister Robert Jenrick commented on the news on Friday and said:

“We will be introducing legislation to restrict ground rents in new leases to zero and outlaw new leasehold houses. We are also considering the important work of the Law Commission on wider reforms to leasehold such an enfranchisement rights and will be responding in due course.”

Sources confirmed on Friday that companies were engaging with the CMA and were cooperating with its investigation, that will result in litigation or legal commitments from the housebuilders to adjust their practices.

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