With the budget due on Monday, many estate agents and property developers are calling for the higher rate of stamp duty to be scrapped in order to reinvigorate Britain’s broken housing market.
However, Brendan Sharkey, head of construction and real estate at top 15 accountancy firm MHA MacIntyre Hudson, has his own Autumn Budget wish list for the construction industry. He recommends the Chancellor considers the following measures:
- Target tax relief at small to mid-tier firms
- Meat on the bones of the mooted digital sales tax
- Exempt over-65s from Stamp Duty Land Tax
- Rationalise CIL rates
“The construction industry has entered a lull. Carillion’s collapse didn’t have the ripple effects many feared, but Brexit has prompted a loss of confidence. One of the most impactful things Philip Hammond could do to support the industry is to target tax relief at small to mid-tier firms to encourage them to adapt productivity enhancing approaches like modular construction.
“Modular construction is the future for large parts of the industry, as the government itself frequently tells us. This technique removes the weather from consideration, and brings factory-style efficiency and better quality control into the production process. Larger construction firms already use modular production, but it needs to percolate down the food chain. One way to ensure this happens would be for the Chancellor to put his money where the government’s mouth is, and to offer extra plant and machinery relief for small to mid-tier businesses who want to invest in modular development.
“We’d also like to see some meat on the bones of the Chancellor’s mooted digital sales tax. Revenues of such a tax could be used to fund a reduction in business rates, making the tech giants support the high street, while at the same time keeping Local Authority funding at the same level.
“Stamp Duty Land Tax is another area where Philip Hammond could innovate productively. As the population ages, more and more of the construction and property market will focus on retirement living. A way for the government to move us in this direction would be to exempt the over-65s from Stamp Duty Land Tax, providing them with an incentive to downsize, freeing up much-in-demand space in key residential areas.
“Now would also be a good time to harmonise certain construction charges. In the interests of fairness I would favour ending the postcode lottery of CIL (community infrastructure levy). There’s a political case for allowing different Local Authorities to charge different CIL rates, but the overall effect distorts the construction market. In an era of low margins and with a pressing need to improve housing supply, the Chancellor should rationalise wildly divergent CIL rates on a regional basis.
We await what Monday brings for the UK construction and real estate market.