The housebuilding sector has given a mixed response to Chancellor Jeremy Hunt’s first Autumn Statement, in which he outlined a series of measures designed to protect the UK against global economic forces, but also provided relief to businesses expecting tougher tax burdens.
Hunt promised a £14bn “tax cut” in business rates, particularly targeted at helping smaller firms. To assist with inflationary pressures, interest rate rises and the downturn in house prices, Hunt gave homebuyers a stay of execution on the stamp duty cut, until March 2025. He also announced that that tax perks would be restricted to clamp down on “R&D fraud” in SME businesses.
While praising his efforts to stabilise the mortgage market, Stuart Law, CEO of property lender Assetz Group said that housebuilders “will have their heads in their hands as Jeremy Hunt failed to afford any time to planning reform, while the retention of the stamp duty cut will protect demand over coming years at a time when a huge imbalance in market forces sits at the heart of our national housing crisis.”
He added: “Until we stop kicking the can down the road, we will never build enough homes, or take steps to make housing more accessible and affordable for more people.”
Law said that housebuilders and developers would also be “deeply concerned that the imperative for government departments to find efficiency savings will mean less public sector investment in the housing sector, as well as planning delays at already under-funded local authorities.”
Paul Woodward, finance director for Dorset-based affordable housing specialist AJC Group, said that while it was “encouraging to hear Jeremy Hunt start his speech with a promise to prioritise stability, growth, and public service, the fact that stamp duty would return for first-time buyers in 2025 was “disappointing.”
He said that “with the Energy Price Guarantee rising to £3,000 for the average household from April, there should be a huge focus on delivering highly energy efficient new homes and retrofitting existing housing stock. However, the UK’s broken planning system – and the prolonged debacle to determine phosphates, nitrates and nutrient neutrality – means a green light for new development is few and far between.”
“For developers such as us who do have live sites, the cost of delivering much-needed EPC-A and B rated homes has sky-rocketed. We are currently delivering 230 affordable, open market, and build-to-rent homes at seven sites across the Wessex region. The cost of labour, materials, plant, and machinery is incomparable to the original budget forecasts.”
Hunt also announced that social rent would be capped in 2023, recommitted to the UK’s COP26 climate goals, and announced a further £6bn would be spent on achieving the targets in 2025. He also announced a target of a 15% “reduction in energy consumption by businesses and industry” by 2030, but was unclear how this related to previously announced goals.
Against the backdrop of the Autumn Statement, property giant JLL was forecasting that UK house prices will fall in value in 2023 by 6% which equates to an average discount of £17,500 on the average current UK house price of circa £290,000.