UK housebuilder Berkeley is urging the government to cut property taxes as cautious buyers keep housing demand weak in the run-up to the October Budget.
The housebuilder has called for reforms to stamp duty and property purchase tax, including a 1% cap on first-time buyers and downsizers, and the removal of a 5% surcharge on investors.
In her latest trade statement to the City of Berkeley, she said that to meet the government’s target of 300,000 new homes a year, and help tackle the cost of living crisis by making homes more affordable, the current stamp duty system, introduced at a time when interest rates were 0.25%, required urgent reform.
“What was a controllable frictional cost when interest rates were at those unique and unsustainable levels has become a binding constraint, now that interest rates have returned to more normal levels. Far more tax revenue is lost through reduced activity than is gained through SDLT on new home construction as set out in HMRC’s assessment. The OBR has historically estimated that for every 1% reduction in SDLT, transactions may increase by up to 6%.”
Accordingly, Berkeley urged the government to consider targeted intervention to support the new build sector and cap SDLT at 1% for first-time buyers; Maximum SDLT for discounters of 1%; and removing the additional 5% investor fee.
“Collectively, this supports people buying their first home, frees up more family homes, and provides more homes for rent. Increased transactions of all types will facilitate much higher rates of housing delivery for all tenures, including affordable primary housing delivered alongside new private homes, which would otherwise not be on offer,” the statement said.
To achieve a sustainable increase in housing supply, Berkeley fully supports the Government’s planning reforms in London; The priority now is implementation. The London Homes package and the updated National Planning Policy Framework are clearly designed to reduce regulatory cost, speed up the system and bring stalled sites into construction; Basic prerequisites for starting supply on industrial sites.
Berkeley insisted it was making good progress developing its sites through the overhauled planning system, to ensure feasible and workable planning approvals. “However, we still need to see more consistency, and the pro-development stance demonstrated in policy making is also adopted in the decision-making process.”
Fellow housebuilders Bellway and Barratt Redrow also recently called for a cut in stamp duty and government assistance for first-time buyers.
