The Autumn Budget 2024, unveiled by Chancellor Rachel Reeves, introduces ambitious measures to support new home construction, boost affordable housing, and encourage sustainable building practices. Here’s a comprehensive look at how this Budget impacts the housebuilding industry, from funding allocations to tax changes aimed at unlocking housing stock and supporting small developers.
1. Increased Funding for Affordable Housing and Support for Smaller Developers
The Budget brings forward a substantial £5 billion commitment to support the construction of 300,000 affordable homes over the next five years, addressing urgent housing needs and supporting low-income families. The Chancellor pledged an additional £500 million to boost the existing Affordable Homes Programme, bringing its total value to £3.1 billion. This funding will be specifically allocated to new home construction across the UK, with the Deputy Prime Minister personally overseeing the first £500,000 of this initiative.
Additionally, £3 billion has been earmarked for smaller developers, aiming to foster a diverse and competitive market by reducing reliance on larger developers who may delay building projects for profit gains. This combined funding is expected to expedite housing delivery, reduce land banking, and enhance access to affordable homes.
2. Warm Homes Plan for Energy Efficiency
The Warm Homes Plan introduces a £3.4 billion decarbonisation initiative over the next three years, targeting energy efficiency improvements for 350,000 homes. Of this funding, £1.8 billion is dedicated to fuel poverty schemes, which will help 225,000 households lower their energy bills. Additionally, the Boiler Upgrade Scheme, which subsidises heat pump installations, will receive increased support to expand the UK’s heat pump manufacturing capacity. These initiatives contribute to sustainable housing and help homeowners reduce energy expenses, aligning with the UK’s net-zero targets.
3. Increased Stamp Duty Land Tax (SDLT) Surcharge for Second Homes and Investment Properties
To make property ownership more accessible for primary homebuyers, the Budget introduces a higher SDLT surcharge on second homes and investment properties, raising it from 3% to 5% on the initial tier. This measure is aimed at deterring speculative property investments, which often drive up prices and reduce availability for first-time buyers and families seeking primary residences.
4. Brownfield Development Funding
The government’s commitment to brownfield site development represents another sustainable step, with targeted funding to encourage new builds on previously developed land. This approach not only helps to preserve green spaces but also supports urban regeneration by creating housing opportunities in well-connected areas. By focusing on brownfield sites, the government is addressing both housing demand and environmental considerations.
5. Capital Gains Tax (CGT) Changes on Non-Property Assets
Although not directly targeting the housing sector, the increase in Capital Gains Tax (CGT) rates on non-property assets—rising from 10% to 18% for the lower rate and from 20% to 24% for the higher rate—may indirectly make real estate investments more attractive. This shift could influence investor behaviour, potentially increasing demand in the housing market and affecting affordability.
Final Thoughts
The Autumn Budget 2024 has brought a welcome focus to the housebuilding industry, with increased funding and sustainable incentives alongside support for SMEs. The emphasis on affordable housing and streamlined planning aligns with the sector’s goals of making quality housing more accessible while bolstering growth and innovation within the industry.
The government’s approach signals strong support for both large-scale developers and smaller firms. The proposed tax reliefs and funding opportunities could prove transformative for industry players as they adapt to these changes and navigate the evolving landscape.
You can read the full Budget Summary on the Government Website here.
Rethync are here to help housebuilders save money and help the environment with our reusable and recyclable construction site hoarding. Contact us on 03300 535 898 or sales@rethync.co.uk to learn more.