The British Property Federation has called on the chancellor to deliver a series of tax reforms and prioritise regulatory stability in the Autumn Budget to address a ‘fundamental and debilitating viability challenge facing development’.
The BPF says that the issues are jeopardising the delivery of new homes as well as the workspace and infrastructure needed to power the economy.
In a submission to HM Treasury, the BPF highlights the annual £110billion contribution of the real estate industry to the UK economy, supporting one in 13 of all jobs in the UK, yet argues that this is at risk due to the ongoing viability crisis impacting all asset classes. The BPF supports its claim with data from July’s S&P Global UK Construction Manager’s Index, which showed the sharpest contraction in activity for five years, the most recent quarterly Build-to-Rent starts showing further decline, and the September 2025 Deloitte London Office Crane Survey recording a decrease in new construction activity for the second consecutive survey.
The BPF says that the crisis is particularly acute in the BtR sector, with construction starts in the first half of 2025 falling to just 2,600 homes, compared with 18,000 new BtR homes delivered in the whole of 2024. The BPF’s submission highlights where the tax system is undermining the viability of high-density housing developments that are rolled out at pace, such as BtR (which builds out 30-60% faster than homes for sale). The sharp decline in the construction of BtR is a significant blow to the government’s ambitions to deliver 1.5 million homes this parliament and fast-track the development of new towns.
Ahead of the Budget, the BPF’s key asks from the chancellor are:
- Reinstate Stamp Duty Land Tax (SDLT) support for high-density housing
The abolition of Multiple Dwellings Relief (MDR) under the previous government in 2024 significantly disadvantaged high-density housing developed at scale, and has permanently eroded the value of the asset class, particularly in less valuable areas. The BPF estimates that the abolition of MDR last year directly stalled or hampered the delivery of up to 25,000 BtR homes, and is calling for targeted support to be reinstated to support the delivery of high-density housing.
- Extend empty property business rates relief to 12 months
Property owners are liable to pay business rates on empty commercial properties after three months for retail and office buildings, and six months for larger logistics buildings, however, analysis by the BPF found that just 9% of empty shops are re-let in six months. The BPF says that this hampers the viability of developments and refurbishments and actively takes away capital at the very point property owners need to carry out refurbishment and energy efficiency improvement works.
- Remove council tax on newly developed BtR homes
Currently, new BtR homes are liable for council tax three months after completion, but the letting of larger developments delivering hundreds of much-needed homes often takes 12 months or more. The current system effectively penalises high-density housing developments that are built out quickly, by adding a significant tax cost that wouldn’t occur on low-density schemes, which are built out at a slower pace.
- Extend zero-VAT for energy-saving materials
In order to make the refurbishment of older rented housing stock viable, the BPF is calling for all energy-saving materials and heating equipment to be zero-VAT rated. As it stands, zero VAT is only applicable when energy-efficient improvements are delivered on a standalone basis rather than as part of a wider refurbishment.
Melanie Leech, chief executive of the British Property Federation, said: “The data is stark. Without targeted interventions from the government to address the development viability crisis, key government priorities such as 1.5 million new homes and the Industrial Strategy will not be delivered.”
“As long-term investors in communities across the country, our members want to harness domestic and global capital to support the delivery of new towns at pace; and invest in more productive workspaces, new homes for all stages of life, and the buildings and public spaces that underpin modern, cohesive communities. Yet despite welcome moves to reform the planning system, investor sentiment remains fragile, as evidenced by the collapse in construction activity across the UK. There are simply too many layers of regulation, tax and levies on new development, which is at odds with the commitment to ‘back the builders’.”
“We appreciate the fiscal pressure the government is under, but we urge the chancellor not to underestimate the cost of inaction – the government will not raise any taxes and levies on development that doesn’t happen. Only by addressing the development viability crisis will the government unlock the economic growth and investment we need to see across the country.”
