Budget silent on cuts but offers boost to housebuilders
Chancellor Alistair Darling pledged to slash the regulatory costs of housebuilding and to deliver development land in a “new deal” for housebuilders, Building reported. However, there was no news on spending cuts.
As part of the budget, Darling announced a “ministerially sponsored action group to address these challenges [in the housing sector] and develop proposals for action”.
According to Treasury documents, the government has identified the supply of viable land, the regulatory cost on the industry and skills as the key challenges facing the industry.
Proposals are likely to include central targets for public agencies, including councils, to release publicly owned land for housing development, and cuts to planning grants for councils which fail to identify a viable five-year supply of housing land.
The unexpected cut in stamp duty for homes worth under £250,000 for first-time buyers – offset by a five per cent rise for homes worth more than £1 million - was warmly welcomed by the Home Builders' Federation, which described it as a “huge boost to the housing market”.
John Healey, the housing minister, said the moves amounted to a “new deal for housebuilding, a new deal for private housebuilding, and a new deal on public land.”
Darling also focused on small businesses unveiling, about £2.5bn to support SMEs, along with a one year business rate tax cut from October. The tax allowance for small firms to invest in new plant and machinery was also doubled to £100,000.
But striking a more sceptical note, Noble Francis economic director at the Construction Products Association, told Building: “This just shows that the real budget is to come after the election, determining where spending cuts are made.”
And CB Richard Ellis head of residential Nick Jopling told Construction News that the 5% per cent stamp duty rise for house purchases over £1 million will have a negative impact on residential development.
He said: “The Government is seeking to attract institutional investment into residential property to kick start development, particularly in areas of most need. This increase in tax will have a negative effect on these ambitions.”