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Investing.com - RBC Capital downgraded Berkeley Group Holdings Plc. (LON:BKG) (OTC:BKGFF) from Outperform to Underperform and lowered its price target to GBP37.00 from GBP49.00.
The downgrade follows the UK Chancellor’s recent Budget announcement, which RBC Capital believes will negatively impact Berkeley Group’s performance relative to the sector over a one-year timeframe.
RBC Capital cited two specific budget measures as concerns for Berkeley Group: a new mansion tax and additional tax on rental income, which the firm characterized as "a double whammy" that could be "viewed as a tax on London as a tax on the rich and wealthy."
The investment firm expressed concern that the rental tax would "shrink the pool of landlord buyers," directly affecting demand for Berkeley Group properties.
RBC Capital also predicted the mansion tax would "slow the velocity of high value transactions in Berkeley’s backyard," further challenging the company’s business prospects despite acknowledging they "admire Berkeley’s business model, the visibility of its earnings and the returns it generates."
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