UK Housing News
From Office Blocks to Homes: Repurposing Spaces to Combat the UK’s Housing Crisis
Leading property expert calls for innovative approaches to counter government’s anti-homebuilding reforms
David Hannah, Group Chairman of Cornerstone Tax, discusses the lack of joined thinking by the new government as the UK's housing crisis rages on
Following the Autumn Budget and the government’s pledge to build 1.5 million homes this Parliament, home ownership still remains out of reach for millions of Brits. David Hannah, Group Chairman of Cornerstone Tax, argues that tackling housing affordability requires innovative strategies, such as repurposing vacant office spaces for residential use, to counteract the government's policies that hinder homebuilding and ownership in the UK.
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The Chancellor's recent 2% increase in the second home surcharge, raising it to 5%, aims to reduce second home ownership, potentially opening up more housing for first-time buyers. Labour's decision to end the temporary nil rate increase for stamp duty in April will likely accelerate transactions in early 2025, as buyers seek to complete purchases before the tax changes take effect. According to David Hannah, Group Chairman of Cornerstone Tax, these tax reforms will shape the property market dynamics and could impact housing accessibility in the coming years.
Meanwhile, the UK has around 1 million unoccupied homes, including second homes and properties exempt from council tax, and long-term empty homes have increased by 16% since before the pandemic. Addressing the housing crisis by repurposing these unoccupied properties and office spaces could make a significant difference. CBRE estimates that nearly 28,000 homes could be created in London alone through converting empty office buildings, with over £1.3bn of office space purchased between 2022 and 2023 for conversion purposes. In the past decade, 100,000 homes have already been converted from office spaces, marking a shift in property use and impacting stamp duty liabilities. Cornerstone Tax highlights the need for policies that support these transformations as a sustainable solution to meet housing demand.
David Hannah, Group Chairman of Cornerstone Tax, comments:
“The decision from the government to lower stamp duty bands shows a concerning deficit of joined-up thinking. Does this Chancellor and Prime Minister not understand that if they want 1.5 million new homes, they cannot drive landlords out of the market, incur additional charges for first-time buyers and freeze up working capital for developers – which can only be available if these homes are selling. I expect stamp duty receipts to fall significantly, then to flatline in Q1 2025, potentially plunging the British property market into a desperate situation. In essence, reducing stamp duty thresholds means that it will ultimately be the consumers who foot the bill.
“Furthermore, it would make sense for the new Government to suspend, or even abolish, the 3% surcharge where properties are being acquired for private rental sector investment. Removing this measure would encourage landlords to increase their holdings, rather than exit the market – reversing the decline in supply of rental homes and potentially expand it to the point where demand no longer outstrips supply.”
David Hannah, Group Chairman
