Berkeley Group Share Price (LON:BKG) Down 8.5% – The Latest

Berkeley Group's share price (LON:BKG) is down 8.5% early in trading, as the UK homebuilder announced a significant leadership transition alongside its fiscal year 2025 results today.

While the company reported a pre-tax profit of £528.9 million, slightly above expectations, the announcement of a new CEO and a strategic shift towards a Build to Rent (BTR) platform has been met with market uncertainty.

The leadership change, effective September 2025, sees current CEO Rob Perrins stepping up to the role of Executive Chair, succeeding Michael Dobson, while Richard Stearn, the current CFO, will take the helm as CEO. This transition is explicitly designed to support Berkeley's ambitious 10-year growth plan, dubbed “Berkeley 2035,” which includes a £5 billion capital allocation strategy. A key component of this strategy is the development of a BTR platform, aiming to deliver 4,000 rental homes, alongside a commitment to return £2 billion to shareholders.

The market’s initial reaction suggests concerns about the company’s profit forecasts for fiscal years 2026 and 2027. While Berkeley boasts a strong operational performance, realized through disciplined execution and cost control, the company acknowledges the need to adapt to current market conditions. Pre-tax profit guidance for FY26 is set at £450 million, with FY27 expected to be similar, contingent on prevailing sales rates. This adjustment reflects the ongoing headwinds facing the UK housing sector, including high interest rates, persistent economic uncertainty, and regulatory reforms that impact project viability.

Despite these challenges, Berkeley emphasizes the underlying demand for its homes, noting a gradual improvement in transaction volumes throughout the year. The company remains committed to the government's housing-led growth agenda and is actively submitting planning applications to accelerate delivery on its sites. A significant portion of Berkeley's operations focuses on brownfield regeneration, with 92% of the 4,300 homes delivered in FY25 built on previously developed land.

This commitment aligns with government policy and positions Berkeley as a key player in addressing the UK's housing shortage, particularly in London, Birmingham, and the South-East. The company estimates that it has provided some £580 million in subsidies to deliver affordable housing and commitments to wider community and infrastructure benefits.

However, the company faces regulatory hurdles. Berkeley, along with several other major UK housebuilders, is currently under investigation by the Competition and Markets Authority (CMA) for alleged breaches of competition law. This investigation, extended to August 2025, adds another layer of uncertainty to the company's outlook.

The consensus Berkeley group price target stands at 4,519p, indicating significant perceived upside from current levels of ~20%, although we are yet to see how the street responds to the latest financials.

Bulls Vs Bears

With Berkeley's shares down 22.9% over the past 12 months, there is clearly a need to shift sentiment as far as the bulls are concerned. The firm's ability to successfully navigate the leadership transition, execute its BTR strategy, and overcome regulatory challenges could prove crucial in determining where BKG goes next.