The chancellor revealed the session’s budget on Wednesday and made some major announcements effecting the development community which focused on two key areas. Provisions to facilitate the development of brownfield sites and some anticipated reparations to address the ongoing cladding concerns across the country.
In 2018, Knight Frank reported that 85% of major housebuilders believed that the government was likely to miss it’s target, to build 300,000 new homes a year by 2022. And just as a reminder, the industry has had a major setback, along with the rest of the world, in the form of a pandemic since then. The constant battle to clear the way for developers to achieve this target continues.
Rishi Sunak announced that nearly £2 Billion will be made available to ease the development potential of 1,500 hectares of brownfield land and theoretically allow for 160,000 new plots to be built. In particular, £300 million has been ringfenced to allow local authorities to access smaller brownfield sites in the hope that SME developers will be able to make use of the land.
This is in line with Mr Johnson’s statement this month that the key to delivery of their housebuilding target lay with the potential of brownfield land, which is notoriously more difficult to unlock and develop than greenfield.
In all £24 billion has been set aside in this budget for housing and development.
Any developer who has been caught up in the ongoing cladding concerns in the wake of the Grenfell fire, and the revelations which rocked the industry since then, has a stake in the decisions made to repair the buildings which are still considered to be unsafe. Everyone agrees that the properties in question need major works, even though when they were built they (typically) met with existing regulations and codes. So who pays for the reparations? The Sword of Damocles has been hanging over developers who could be liable for billions of pounds. The sword has fallen, but not too hard.
Property developers will be taxed to raise a collective £5 billion. The levy will affect construction enterprises with profits in excess of £25 million and will be taxed at 4% over this threshold. The funds will then be allocated with the aim of repairing the buildings that represent the greatest risk. It’s a step forward for the residents of these buildings, although it will take a financial toll on developers, but once again, campaigners have said the money is nowhere near enough. This is likely not the last budget where cladding will be spotlighted.
As expected the spending for this budget has focused on major backlogs in education, the courts and of course, the NHS, effected by the pandemic. And tax breaks have been aimed at those industries which need the greatest help to recover. In other words, it’s not been a development led budget.
In any case, our industry is still eagerly awaiting the outcome of the NHQB code which was consulted on over the summer and will likely have a significant impact on all of us and our interaction with customers. All this while striving to make existing buildings safer, and racing towards the 2022 target of 300,000 new homes a year.