In the Spending Review, announced to Parliament on 11 June, Chancellor Rachel Reeves set out plans for funding priorities over the next five years.
Here, Andy Jones, Group Director of Corporate Sales, Lettings & BTR considers the impact of the Spending Review on property investment:
“While the considerably increased funding for affordable housing is welcomed and will help provide a boost to new homes and affordable housing development, from a property investment perspective I feel that the Chancellor has missed an opportunity to tackle the development viability crisis which is another important part of the jigsaw. Without urgent intervention to tackle the real-world constraints choking housing delivery, particularly in Build to Rent (BTR) and regen schemes, government ambitions will remain out of reach.
“Despite rhetoric around growth, there is still no clear recognition that many housing developments that were viable just five years ago are now stalled. Interest rates, stubbornly high construction costs, highlighted in the BCIS cost index for continued inflation in core construction costs and a plethora of new taxes and regulatory hurdles (specifically new building safety regulations) have combined to choke viability, especially in areas with lower land values. High-density schemes and regeneration projects, which are so often essential to delivering housing targets, have been hit hardest.
“We cannot talk seriously about unlocking housing or reviving growth without confronting this reality. That requires the government to take bold action to reduce upfront costs, provide greater certainty over tax and regulation and speed up the planning and infrastructure that underpins delivery. The industry is desperately in need of measures to address mounting delays from the Building Safety Regulator and the under-resourcing of planning departments. These are real-world bottlenecks which investors face every day, and which the government could relieve immediately with the right focus.
“The industry will continue to lobby for the return of Multiple Dwellings Relief for Build to Rent, which is particularly necessary in lower value areas where it supported regeneration and housing delivery. Its abolition has made viable schemes unviable – and no serious plan to support rental delivery can ignore that fact. There is quantitative analysis showing reduced viability of Build to Rent projects post MDR abolition.
“We welcome the Government’s stated commitment to tax certainty – but it must go further. Build to Rent and modular housing (MMC), for instance, need clearer VAT treatment and better support to achieve scale. And across the board, we need fewer, not more, untested levies and obligations at the start of the development process. NHBC foundation research shows slow uptake of MMC partly due to tax and regulatory uncertainty.
“If we are to meet housing targets, regenerate brownfield land, and drive real economic growth, viability can no longer be the elephant in the room. The property industry stands ready to deliver – but only if Government is prepared to work with us on the fundamentals.”
