UK Housing News
King’s Speech:
Why Property Development Needs Incentivising
David Hannah, Group Chairman of Cornerstone Tax, comments on Labour’s plans to accelerate housebuilding
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Putting growth at the heart of Labour’s policy agenda, the King’s Speech outlined further details on the new government’s plan to build 1.5 million new homes over the next five years. The plans are certainly ambitious, with last week’s speech from Chancellor Rachel Reeves detailing the introduction of mandatory housing targets and the removal of “red tape” for the approval of developments. According to David Hannah, Group Chairman of Cornerstone Tax, the plans outlined by King Charles earlier today fail to mention one essential factor: private developers.
Hannah asserts that developers simply do not have the ability to ramp up their work overnight, whilst also suggesting that stricter housebuilding targets will only discourage growth within the construction industry through adverse incentives. In order to stimulate the development sector and get Britain building again, Hannah instead recommends that developers be offered a tax break, encouraging market entrants whilst providing the necessary capital to embark on Labour’s ambitious homebuilding goals.
David Hannah, Group Chairman of Cornerstone Tax, comments:
“Labour’s plans are incredibly ambitious, no doubt about that, however, there remain several important elements that are yet to be addressed. It’s been described by some commentators as a ‘War on NIMBYs’ and it’s not hard to see why. The decision to cut red tape and remove blockages to planning make for good soundbites, but we have little clarity as to what this means in practice. Will Labour ignore the concerns of local residents in favour of the ‘greater good’? It remains to be seen.
“Labour must also address the ‘Developer-shaped’ Elephant in the room. For years private developers have been plagued with high interest rates and an ever-increasing tax burden. Earlier this year, a CMA probe found that several major firms had been persistently under delivering on their housing targets, perhaps due to a chronic lack of working capital. Developers cannot simply ramp up their output overnight, the new government must create new incentives for the sector, and punitive housing targets are not the way to go.
“Private developers ought to be offered a tax break for the vital services that they provide, encouraging new entrants to the market whilst also stimulating further economic growth.”
David Hannah, Group Chairman
