Today's announcement by the Government, that stamp duty land tax will not apply to purchases of residential property of £175,000 or less will be welcomed by first time buyers, but with the average home in England costing £178,364 those benefiting will be few in number. At a time when house building is at its lowest level since 1945 today's announcement is little more than a sticking plaster for the house building industry, says the Federation of Master Builders (FMB). Alongside stamp duty reform the Government should look at ways of freeing builders to get on with building the homes that are so badly needed.
Brian Berry, Director of External Affairs at the FMB said:
"Today's announcement is no more than a sticking plaster for the property market. It will not do anything to tackle the underlying problem that there is a shortage of housing in this country, which pushes the prices of existing properties beyond what increasing numbers of people can afford to pay. The Government has plans to build three million new homes, which would relieve some of the pressure on the housing market but builders are being prevented from building by a restrictive planning system.”
Berry continued:
"There are 675,000 empty homes in England, 288,000 of which have been empty for more than six months. A key reason for this situation is the fact that some buildings require considerable repair work before they can be lived in. The high rate of VAT makes them too expensive for many owners to maintain or refurbish. For example, Hyde Housing Association recently paid £120,000 in VAT on a project involving 21 homes. With the reduced rate of five per cent VAT, they would have saved enough to refurbish another three homes. Yet on the issue of VAT the Government refuses to do anything meaningful.”
Berry concluded:
"If the Government is serious about sorting out the housing crisis in this country, it has to stop reviewing the planning system and get on with reforming it. The planning system is the single most important factor inhibiting the construction of new housing, for example one FMB member has only seven houses left to build this year, but a further 700 units caught up in the planning system! It is time the Government freed the construction industry from the burden of unnecessary bureaucracy and taxation and allow builders to get on with building the homes that are so badly needed instead of focusing on one off stamp duty "holiday” gimmicks.
2nd September 2008
