Berkeley hit by key one-year delay

BERKELEY's flagship London development of around 3000 homes - Royal Arsenal at Woolwich - has been been put back by about a year.

Founder and managing director Tony Pidgley said the Government had 'called in' plans for the second phase of the site, where builders were due to start work this autumn, over concerns about space between apartment blocks.

Work on redeveloping part of the 19th century Grand Store building into around 40 luxury flats - complete with cinema complex - has also been delayed as part of the Government planning review, confirming reports first revealed in the Evening Standard.

Berkeley is still working on developing 1200 flats within the existing Arsenal buildings which date back to the Napoleonic era. Local authorities had given their blessing for the next 3000 homes, to be built from scratch, along the Thames.

The Government's intervention will now spark a public inquiry into that stage, Pidgley said, due next February or March, meaning the earliest Berkeley will be able to resubmit plans is next summer.

'The reality is they are unhappy about the boundaries - is there enough space between the buildings? The phrase they use is urbanism. We would like to be starting by the autumn of next year. This development will go ahead.'

Confirmation of the setback coincided with the release of fullyear figures with early signs that its London market is beginning to turn.

Crest Nicholson yesterday warned the housing market continues to remain challenging despite reports of buyer activity increasing. It said the normally healthy spring selling season was shorter and less active than the 'exceptionally strong' period last year.

Berkeley's forward book of sales to its year-end at 30 April stand at £945.3m, against £948m the year before when the market was roaring ahead. May and June sales were up marginally on last year, Pidgley said.

But pre-tax profits fell 11.7% to £202.9m on turnover of £1.2bn compared with £1.39bn last year.

'We had an exceptional market three or four years ago - this is a normal one. We are having to work hard for our living, there is nothing wrong with that,' said Pidgley.

Yesterday's £251m sale of the Crosby subsidiary leaves Berkeley nearly debt free.

? The number of buy-to-let property owners getting into mortgage arrears with Bradford & Bingley is stabilising, the group said. In February, the lender reported a 60% jump in 2004 arrears, albeit from abnormally low levels, but these are flattening to more-normal levels.

The buy-to-let market remains strong amid high demand from tenants and continuing low interest rates. B&B said it was happy with City forecasts of £297m pre-tax profit for 2005.