Budget Press Releases – Housing on hold

Brendan Sharkey, real estate and construction specialist at MHA

Rachel Reeves’s focus was very much on affordable housing today which will be welcome news for the industry but is unlikely to impact those that are not in that sub sector.

However, the increase in National Insurance contributions will mean that the cost of building will go up and ultimately the increase will be passed on to house buyers. The hiring and firing of staff will also become more difficult with the Employment Rights Bill. Housing is cyclical and house builders do not want overheads that are not performing.

The increase in Stamp Duty on second homes is unlikely to make a real difference to housebuilders. It looks as though the  housing will have to wait until the announcement of their housing strategy in the Spring which should be for a ten-year period to get any answers on how the government are planning on resolving the issue of meeting their target of building 1.5 million homes. One has to assume the government thinks it can be in power for 10 years to see the programme through.

However, Rachel Reeves has not held back on spending on rail, schools and green infrastructure. Fundamentally, any announcement on government spending to build new infrastructure will be welcomed by the construction industry.

One silver lining was the consultation on the Mortgage Guarantee Scheme with a view to making permanent the support of 95% loan to value on first time buyer’s purchase, this would give house builders some confidence in this sector of the market.

One cloud for the owners of construction companies is the reduction to 50% for Business Property Relief from April 2026.
Many owner managed construction invest heavily in their companies, rather than pensions, thinking they are building a value that they can pass on to the next generation.

For IHT, rather than the value of the company being excluded from the tax – 50% of the value will be taxed at 40% on death. This will be a blow to many, and they will need to consider how they plan their long- term financial planning. Many businesses may have to be sold to cover the tax payable. This is likely to give a boost to keyman insurance to protect against untimely death.

Autumn Budget 2024