What housebuilders want from the Autumn Budget

With a shake of his red box, Chancellor Phillip Hammond is bound to conjure up some headlines on Monday. But what do housebuilders hope to see in the Autumn Budget?

LESS TAXES

Tax changes are bound to play a starring role in Monday’s budget. More residential taxes are widely mooted to be introduced. According to LCP, it’s time to reverse some of the havoc caused by George Osbourne’s toxic mix of taxations on the property sector.

Naomi Heaton, CEO of LCP, said, “The introduction of successive tax increases on residential property is creating a black hole in the Exchequer tax take. Its aim of stimulating the domestic housing market does not appear to be working, with a fall in transactions of almost 35% over the year.

“The government appears to be blindly ignoring the fact that reducing investor appetite for higher value sales, particularly in London’s luxury developments, is not freeing up homes for the domestic market. With the average price of new builds in London being 31% more than the mainstream market, they will never be part of the domestic heartland. The slowdown in sales, now almost 14% less than last year, simply prevents developers from investing in other sites where more affordable housing can be provided.

“Hammond may well be tempted to increase property taxes to win ‘the people’s vote’ and to try and plug this black hole. The actual facts, however, are that this is neither certain to increase tax revenues, nor is it likely to stimulate the all-important domestic housing market. It is more important than ever to have a well-thought-out strategic approach, rather than a short-term tactical ploy.”

SUPPORT FOR RETIREMENT HOUSING

While Hammond made Stamp Duty disappear altogether for First Time Buyers in last year’s Budget, this year pressure is mounting for him to pay last-time buyers the same courtesy.

“As the population ages, more and more of the construction and property market will focus on retirement living,” said Brendan Sharkey, head of construction and real estate MHA MacIntyre Hudson. “A way for the government to move us in this direction would be to exempt the over-65s from Stamp Duty Land Tax, providing them with an incentive to downsize, freeing up much-in-demand space in key residential areas.”

Phil Bayliss, Head of Later Living, Legal & General, added, “Of those Last Time Buyers who were open to downsizing in our report, 32% said they would be more likely to do so if they benefited from a reduction in or exemption from stamp duty. Our report evidences that there needs to be consideration around transactional costs and how a reduction would incentivise downsizing across the whole market.”

MODERN METHODS OF CONSTRUCTION

Incentivising modular construction is another popular request. “The construction industry has entered a lull,” said Sharkey. “Carillion’s collapse didn’t have the ripple effects many feared, but Brexit has prompted a loss of confidence. One of the most impactful things Philip Hammond could do to support the industry is to target tax relief at small to mid-tier firms to encourage them to adapt productivity enhancing approaches like modular construction.

“Modular construction is the future for large parts of the industry, as the government itself frequently tells us. This technique removes the weather from consideration, and brings factory-style efficiency and better-quality control into the production process. Larger construction firms already use modular production, but it needs to percolate down the food chain. One way to ensure this happens would be for the Chancellor to put his money where the government’s mouth is, and to offer extra plant and machinery relief for small to mid-tier businesses who want to invest in modular development.”

PLANNING REFORM

James Bainbridge, head of Planning & Development, Carter Jonas said, “Delivery of new homes has to occupy the forefront of the Chancellor’s agenda during his annual Budget.

“First and foremost, local authorities must be equipped with adequate funding, and the Tory Party Conference brought with it the announcement that Central Government would remove the cap on Housing Revenue Account (HRA) borrowing. Providing the logistics stack up, this should allow councils to borrow against existing assets, giving them greater financial power to cover the cost of new homes. Some clarity around this is becoming urgent.

“Public spending initiatives that expedite the supply of new homes across the country would also be welcome news from the Chancellor. The Housing Infrastructure Fund presented much promise, but we need assurances that such monies allocated to specific projects are being released in a timely fashion. As ever, delays kill momentum, and there is already evidence that little progress has been made. We don’t need more false promises.”

HELP TO BUY

Given that a third of new builds were sold with the help of the equity loan scheme last year, the continuation of Help to Buy beyond 2021 tops most housebuilders’ wishlists.

“A commitment to Help to Buy, or an alternative that will be in place beyond 2021, would help the house building industry to rebuild confidence in the new homes market – particularly at an affordable level,” said Robert Clifford of the SDL Group. “Against a backdrop of ongoing Brexit uncertainty, government needs to assure house builders that now is the time to invest in the supply of the future of new homes – we look forward to seeing how the Chancellor addresses this challenge.” (Credit: The most complete and best Bitcoin robot Avis explanation.)

CHANGES TO CIL

“In the interests of fairness, I would favour ending the postcode lottery of community infrastructure levy,” said Sharkey. “There’s a political case for allowing different Local Authorities to charge different CIL rates, but the overall effect distorts the construction market. In an era of low margins and with a pressing need to improve housing supply, the Chancellor should rationalise wildly divergent CIL rates on a regional basis.”