Autumn Budget: housebuilders call on tax stability to accelerate UK housing delivery
Ahead of the Autumn Budget, Kelly Boorman, National Head of Construction at leading audit, tax and consulting firm RSM UK looks at:
- Frustration among housebuilders over planning delays and administrative burdens.
- Speculation on property tax reform driving market uncertainty.
- Rental market pressures for landlords and housebuilders.
- Costs, demand and funding barriers reducing development viability.
Kelly Boorman comments: “Despite the government’s focus on cutting planning delays and getting Britain building, housebuilders are yet to feel the benefit of this on the ground, as red tape and administrative burdens continue to deter progress. The latest amendments to the Planning and Infrastructure Bill will help remove some of these barriers, but there are still broader structural challenges which cannot be resolved through policy reform alone, including labour shortages, rising construction costs and funding challenges. The timing of the Autumn Budget is also adding to supply chain disruption and making it increasingly difficult for developers to plan with confidence and mobilise projects, due to ongoing uncertainty around tax policy, planning reform and a lack of clarity of future allocation of spend in the NISTA framework.
“Rumoured potential changes to property taxation, particularly changes to stamp duty land tax (SDLT) and the introduction of an annual property tax, are compounding market uncertainty. While reducing or removing SDLT could help stimulate the market and improve development viability, the question remains over what tax would replace it to plug the fiscal gap. With growing speculation that the government may implement an annual property tax, many developers are concerned that this could depress house values, disproportionately impact elderly homeowners, and squeeze the rental market.
“UK real estate is already taxed more heavily than most OECD countries, and further proposals to increase income tax on rental income could drive landlords out of the market and strain supply. This would place additional pressure on housebuilders to deliver viable rental stock at lower margins and under more complex EPC regulations. These pressures are being felt most acutely in the London market, which is currently at just 5% of its housing delivery target, making developments increasingly unviable.”
She added: “While some challenges remain beyond government control, construction businesses need greater stability through consistent tax policy and planning reform in the upcoming Autumn Budget, with funding from NISTA to encourage adoption of new technologies, improve efficiencies and build better. Developers also need visibility of the funding pipeline, underpinned by targeted government action to tackle skilled labour shortages and support delivery of the housing and infrastructure targets needed to ‘Build Back Better’.”