Housebuilding is set to get a boost from the Chancellor’s Stamp Duty overhaul, with major builders immediately feeling the benefit. Big housebuilding companies saw a jump in share prices following George Osborne’s Autumn Statement announcement that the single ‘slab’ Stamp Duty was being ditched in favour of a banded approach. As investors reacted to the news, Persimmon Homes’ share price grew 1.9% and Bovis Homes’ share prise rose 2.4%.
The move is expected to benefit the lower levels of the housing market, where buyers have been struggling to get onto and up the property ladder. The new system will benefit 98% of those paying Stamp Duty. Under the change, those paying more than £937,000 for homes now pay more, but all those buying homes priced below that level pay less.
The new duty bands are:
- No stamp duty on the first £125,000 of purchase price paid
- 2% duty on the share of the price between £125,001 and £250,000
- 5% on the share between £250,001 and £925,000
- 10% on the share between £925,001 and £1.5m
- 12% on everything over £1.5m.
Key announcements on roadbuilding, housebuilding and flood prevention were contained in the National Infrastructure Plan released directly prior to the Autumn Statement. Other announcements in the Autumn Statement included:
- Establishing a £2.9bn Grand Challenges fund, to be invested in major research facilities
- A £235m investment in the advanced materials Sir Henry Royce Institute in Manchester and £31m investment in a series of new energy security and innovation centres
- More action to grow economic activity across the North of England, with £7bn investment. This includes £78m towards Manchester City Council’s proposed new theatre and exhibition space
- Abolishing employer National Insurance contributions on earnings up to the upper earnings limit for apprentices under the age of 25
- £25m funding in 2015-16 for first-time heating systems in off-gas-grid homes in England
- A pledge to carry out a review of the future structure of business rates for the 2016 Budget.
What they said?
Chris Temple, engineering and construction leader at PwC, said: “Continued rises in labour and material rates in the construction sector have the potential to be further exacerbated by these growth opportunities; this calls for further action to address these issues.”
British Property Federation chief executive Liz Peace, said: “The structural review of business rates is a hugely welcome, if belated, announcement. Creating a business rates system fit for the 21st century will be one of the central challenges facing the next parliament, and we will continue to work with all parties to ensure the fairest possible settlement for rate-payers across the country, and all sectors of the economy.”
National Housing Federation chief executive, David Orr, said: “Prospective home buyers will be breathing a sigh of relief today following the reform of stamp duty, but the Chancellor’s announcement won’t help people trapped paying high rents and stranded on social housing waiting lists. The announcements made earlier this week to boost housebuilding are a step in the right direction, but we now need bold and urgent action to end the housing crisis within a generation.”
Dr Diana Montgomery, chief executive of the Construction Products Association, said: “The most important element of the statement for the construction industry was National Infrastructure Plan 2014. Construction is an enabler of UK economic growth, and that is never more evident than in the delivery of the new infrastructure the country needs for the 21st century.”