Housebuilders have expressed concerns regarding the government’s goal of constructing 1.5 million homes in England by the end of the decade, labeling it as overly ambitious. The Home Builders Federation (HBF) has communicated with the Office for Budget Responsibility (OBR), suggesting that without initiatives to improve affordability for first-time buyers and reduce taxes, this target may not be achievable.
This issue presents a challenge for Chancellor Rachel Reeves as she prepares for the upcoming Budget, since a rise in new home construction underpins the OBR’s economic growth projections. The government has reiterated its commitment to achieving this housing target.
In light of recent fiscal challenges, the chancellor aims to counter negative economic forecasts, particularly given a larger-than-expected shortfall in public finances. The OBR is predicted to revise downward its productivity estimates, which measure economic output per hour worked, ahead of the Budget scheduled for November 26.
While the OBR did not formally endorse the 1.5 million figure, its previous acknowledgment of government planning reforms’ potential impact suggested that 1.3 million homes could be constructed over the next five years across the UK.
The HBF argues that without further policy adjustments, reaching the target is unlikely. The federation has welcomed recent planning reforms but believes they alone are insufficient to stimulate building in the current market conditions. HBF, representing builders responsible for 80% of new homes in England and Wales, noted the absence of government support for first-time buyers since the cessation of the Help to Buy scheme in 2022.
Additionally, the federation raised concerns about proposed increases to the landfill tax and the upcoming building safety levy, which are expected to raise construction costs. HBF spokesman Steve Turner stated that while reforms are positive, rising policy costs and taxes undermine the viability of many building projects.
Recently, the government announced intentions to reform the house-buying system to enhance efficiency and reduce costs for first-time buyers, reinforcing its commitment to achieving the 1.5 million homes target.
Source: https://www.bbc.com/news/articles/cr5er1dpmn8o?at_medium=RSS&at_campaign=rss