The Spring Statement and the housebuilding sector

By Tim Foreman, Managing Director of Land and New Homes, LRG

Building Safety Levy to be pushed back a year after housing sector backlash

As part of the Remediation Acceleration Plan published in December 2024, the government originally planned to launch the Building Safety Levy in?Autumn 2025. This has now been delayed by a year, partially to allow housing developers who will pay the levy around 18 months to factor the costs into their financial planning. While safety is a very important consideration, it is only right that developers have more time to prepare. The schemes to which the levy will apply will have been through extensive viability tests and to make this additional financial requirement at such a late stage in the process would have had an immediate and very detrimental impact, especially affecting smaller builders.

￡2bn top-up for the Affordable Homes Programme

The additional funding for affordable housing is very welcome especially as the demand for affordable housing, and cost of building it, continues to increase.

However, delivery of affordable housing would benefit from addressing a wider range of types and tenures than the government is currently providing for.? Specifically, shared ownership plays a very important role in getting people on to the housing ladder and yet seems to have been largely ignored by this government.?

The popularity of shared ownership is increasing, partly because today’s first-time buyers are paying almost a third more to get on the property ladder than they were five years ago. Furthermore, in the last decade the number of private renters moving into home ownership fell by 23%. The government’s current stance on housing affordability – not least the recent increases in Stamp Duty and the freezing of Lifetime ISAs - has resulted in policies that are making it even harder for first time buyers to enter the market. Shared ownership deserves the same level of government-assisted marketing as benefited the now defunct Help to Buy scheme and it seems detrimental to the whole ‘growth agenda’ that the government is ignoring this important tenure.

Keeping the property market moving

The significant increase in Stamp Duty as of next week could lead to costs for a first time buyer rising by ￡6,250. This, along with the absence of shared ownership policies, is ill-thought through in relation to meeting people’s changing needs - and generating repeat revenue for government coffers.

First time buyers are the foundation of the vast majority of chains in the house-buying process: without them, the housing market would come to a standstill, impacting everyone from young families desperate to move out of a flat to downsizers who can make family homes available.

A Stamp Duty review

In the last week there have been calls for the government to review or abolish Stamp Duty. I think we have to accept that the latter is never going to happen other than in the most extreme (short term) circumstances.

But the government must realise the need for flexibility. Exorbitant levels of Stamp Duty hinder movement in the property market, not only providing a significant financial hurdle for would-be first time buyers but also preventing people from downsizing at the other end of the chain.

A review of Stamp Duty, even if resulted in a lower level being paid, could increase the number of moves considerably and in doing so, actually raise funds which could be channelled into the government’s most pressing areas of demand.

￡600m for construction training

The funds that have been allocated to train up to 60,000 more skilled construction workers are very welcome as housebuilding targets were inevitably going to be compromised by an absence of construction workers, trades and craftspeople.

While this move goes some way to addressing labour shortages in the medium/long term, I still have grave concerns about the availability of labour and materials to deliver 1.5 million homes this Parliament. Furthermore, we need to ensure that an increase in quantity does not denote a decrease in quality.

It is also important that the SME housebuilder is protected: we need variety, adherence to local styles, flexibility to work on smaller sites and the many other benefits that smaller housebuilders bring. Overdemand for materials risks smaller housebuilders missing out on vital construction products and as such threatens their existence – ironically, when they are needed most. It is encouraging that the October Budget announced plans to double the ENABLE Build scheme to ￡2 billion so that smaller housebuilders and firms can support the delivery of new homes, but support needs to be in place throughout the build progress, not only at the start.

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