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One of Britain’s biggest housebuilders has said it will stop buying new land and hiring new staff, as it grapples with the impact of the Iran war on the property market.

Berkeley, a London-focused housebuilder, said it would cut costs as it warned that “geopolitical volatility” and “reduced potential” for interest rate cuts could weigh on the business.

The FTSE 100 company said it would stop buying new land, implement a hiring freeze and employ fewer subcontractors.

The group now expects to report more than £1.4bn in pre-tax profit from 2027 to 2030, compared with an earlier forecast for about £450m this year and in 2027.

Shares in the company plunged by 18% on Wednesday morning, making it the worst performer across the FTSE 100.

Berkeley said: “In the first two months of 2026, we had begun to see signs of a modest recovery in sales volumes.

“However … recent geopolitical events and the macroeconomic consequences, including reduced potential for further rate cuts, could reduce confidence in a near-term market recovery. This has now become a reality.”

It added that it would stop buying new land because of “unprecedented” increases in costs and regulation, and weak demand from buyers.

The company, which has sites around London and the south-east, no longer believes it can make a sufficient rate of return on new land, which it blamed on a “continuous increase in the tax and regulatory burden on residential development”.

The blow to the property market comes as the UK government tries to meet its ambitious targets to build more new housing.

Bosses in the sector have said it has struggled against higher taxation and regulation in recent years, such as new building safety rules.

Berkeley said the new process “has lengthened the time between obtaining planning approval and starting on site by about 12 months”.

Meanwhile, the war in Iran has fed fears around inflation, elevated interest rates and steeper mortgage costs. Average mortgage rates in the UK have flown past 5% since the start of the conflict, according to the data provider Moneyfacts.

Last month the rival housebuilders Barratt Redrow and Persimmon were the worst performing stocks across the FTSE 100, according to analysis by the broker Interactive Investor, with both businesses losing more than 20% of their value.

Berkeley, which is headquartered in Surrey, employs more than 2,500 people. Its business model is focused on the development of brownfield regeneration projects in urban areas.

It currently has enough land for 50,000 homes, with a further pipeline for another 10,000 homes, in London and the south-east. The company said the pace of its construction work on existing sites would be slowed down to match market demand and regulator approvals.