Committee wants the OBR to test Budget measures for their effect on the market
An independent housing committee chaired by Sir Vince Cable has urged the Office for Budget Responsibility (OBR) to assess every Budget measure for its impact on the housing market, ahead of Chancellor John Healey’s first Budget on 28 October.
The Housing Policy and Delivery Oversight Committee, funded by the Family Building Society, issued its latest assessment on Friday. Members include the society’s chief executive, Mark Bogard, and Neil Jefferson, chief executive of the Home Builders Federation.
A housing test for the Budget
Cable said: “Housing can be a tremendous engine for growth in the economy, and we support all efforts to improve quality and delivery. In fact, it is integral to so many aspects of the economy that we believe it would be helpful for any budgetary measure to be assessed for impact on the market.”
The OBR already forecasts housing supply. Its March forecast projected UK net additions dipping to 220,000 in 2026-27 before passing 305,000 by 2030-31 as planning reforms take effect.
The committee gave general support to Your First Home, which the Government announced on 26 September as a 2.5% deposit and 20% equity loan for first-time buyers of new builds in England. It said the Budget may confirm price caps and developer contributions, and wants lower contributions from smaller builders. It warned that buyers could defer purchases while awaiting the scheme. It also noted that Help to Buy ran on an analogue system, whereas the new scheme is likely to need a digital system yet to be built.
Cable said builders “need certainty and simplicity”. He added: “I used to be opposed to Help to Buy policies, but I believe the new proposals will stimulate new building without creating inflation.”
Stamp duty and VAT proposals
The committee’s favoured option was a return to the Covid-era stamp duty holiday, which lifted the nil-rate threshold to £500,000. A more complex alternative would exempt first-time buyers and downsizers. It also backed abolishing VAT on household extension and refurbishment projects, which are typically charged at 20%, unlike new builds.
Cable said: “We have considered again Stamp Duty and urge the Chancellor to sweep away the Treasury’s siloed view of revenue to consider the impact on the wider economy.”
The committee said the holiday generated almost as much tax revenue as it forwent. LSE London research, commissioned by the Family Building Society, estimated about 140,000 additional transactions. Stamp duty receipts alone fell 19% in 2020-21, government figures reported at the time showed, so the claim rests on wider tax gains from increased activity.
Prime Minister Andy Burnham has already ruled out changing or scrapping stamp duty in this Budget, HomeOwners Alliance reports.
Supply gap widens
The committee said the Government is falling further behind its target of 1.5 million net additional homes in England by the end of this Parliament. A briefing by planning expert Kelvin MacDonald cites an estimated 437,900 net additional homes between 9 July 2024 and 20 September 2026. His extrapolation gives just under 1 million by the end of the Parliament, a third short. He notes that the estimate for 2025-26, now 196,900, is lower than the earlier figure of 199,500. BCIS analysis of the same data found 29% of the target delivered with 44% of the period elapsed.
Cable said: “Planning reform has been introduced, and much was essential after the Grenfell tragedy. However, the full impact is likely to take more than a single Parliament to work through. The immediate effect is that it makes developments by SMEs much more difficult as they do not have the resources to work through all the requirements. This concentrates activity in the major housebuilders.”
The committee suggests exempting smaller sites from some non-safety regulations to free planning officers for larger applications.
For advisers, stamp duty, VAT on refurbishment and first-time buyer support all bear on clients’ decisions to move, downsize or renovate. The Budget should show which, if any, the Treasury adopts.
