The latest announcement of the Autumn Budget has received mixed reactions from both property industry professionals and developers. The main elements which related directly to property were a £24bn ’multi-year housing settlement’, which comprises the £11.5bn for affordable housing and £1.8bn on homes for brownfield land and a sum of £5bn allocated to the removal of cladding on unsafe residential buildings, which will be partly funded through a residential property developers tax.
This tax will only be imposed on larger developers, with profits above £25m, at a rate of 4%. Whilst these two parts of the budget were generally welcomed, the future homes being built must follow a strategy to meet the needs of the British Public. Mike Shearn, Haslams COO says:
“It’s great to see a funding initiative to help resolve the cladding issue. This should give confidence back to this end of the property market, although I can imagine that developers will be more than a little annoyed about having to pay to remediate materials and works that have previously been approved by local government Building Control.”
The chancellor’s plan regarding the removal of cladding on unsafe residential buildings will be largely welcomed by property leaseholders and occupiers who, so far, have been left to deal with ongoing cladding issues, however a clear process for the remedial works must be put in place. Mike Shearn continues:
“The Government has resisted the urge to tinker with the demand side of the residential property market. Demand is strong and whilst initiatives like “Help to Buy” have supported the market during weak moments, they have undoubtedly driven house price inflation and not necessarily supply.”
Previous reforms have certainly driven the rise of house prices, however the latest announcement demonstrates a missed an opportunity to reshape the Stamp Duty Land Tax to reflect the increase of property values and remove some of the market distortions it causes.