Autumn Budget Reaction from Wavensmere Homes
Reacting to Rachel Reeves’ Maiden Budget, James Dickens, Managing Director of Birmingham-based housebuilder Wavensmere Homes, said: “The economic cost of Reeves’ ‘balancing the books’ first Budget will be felt by the pockets of all those looking to move onto or up the property ladder, and by the housebuilders vying to deliver energy-efficient new homes.
“Her tax raising package is bigger than any for a generation. The OBR has made some downgrades to the forecasts for GDP growth, but if CPI inflation doesn’t drop to a 2% average until 2029, then the era of ultralow interest rates is a thing of the past.
“Maintaining the Freeze on Income Tax thresholds until 2028 will bring in £7bn in additional ‘stealth tax’ revenue. Employer National Insurance contributions are rising by 1.2% to 15%, in order to raise £25bn, which will be a bruising hit to business growth plans. Private school fees will be subjected to 20% VAT from January 2025, which is likely to increase the demand for already oversubscribed state schools. However, we are relieved that the Fuel Duty Freeze extension and 5p cut is being maintained for another year.
“As a Birmingham-based housebuilder, we do welcome Reeves’ go-ahead to bring the HS2 line into Euston.
“The significant hike in Capital Gains Tax is being applied to the sale of shares and businesses, but not buy to lets – or second homes, which are being hit by a 5% Stamp Duty surcharge. Landlords are being disenfranchised resulting in far less attainable homes to rent available in the marketplace. It is no coincidence that the number of homes up for sale last month that had previously been available to rent reached a record high of 18%.
“The £500m fund for an initial 5,000 extra council houses is certainly needed. However, Angela Rayner’s broader ‘£1bn council housing revolution’ could play into the hands of the increasingly powerful land-rich PLC housebuilders. Meanwhile, planning and pre-construction issues continue to negatively affect the supply of new homes, with as few as 135,000 expected to be built this year. Constructing 300,000 new homes per year remains a pipedream! The Chancellor and the Deputy Prime Minister should be finding ways to assist housebuilders with delivering the Future Homes Standard and Biodiversity Net Gain legislation, to counteract the cost burden being passed onto the consumer.
“The only real help first time buyers currently have to access the housing ladder is the Stamp Duty exemption for homes valued up to £425,000, but this temporary threshold change will end in March 2025. The overall health of the market would improve from a government initiative enabling would-be homeowners without a significant deposit to climb out of the rental trap.
“This record-breaking tax raising Budget must now be followed at the 7th November MPC meeting with a meaningful Base Rate cut to stimulate the economy and reduce the cost of servicing a mortgage. A quarter point drop wont do enough to provide the market visibility and confidence that is required across all industries.
“Wavensmere Homes has grown year-on-year by defying industry challenges and constructing attainably priced houses and apartments in highly sustainable, popular urban locations. Our focus on construction deliverability will see the keys for £120m of high EPC-rated new homes handed over to customers across the Midlands and Suffolk this year.
“Schemes like Belgrave Village in central Birmingham sit in distinct contrast to every other residential construction site on the horizon. The city skyline is awash with tower cranes for Build-To-Rent blocks. However, it’s actually family houses and a mix of different typologies that are in high demand, so that’s what we design and build.”
Wavensmere Homes is constructing six major urban regeneration schemes, located in central Birmingham, Derby, Cheltenham, Wolverhampton and Ipswich, and has three further projects in the immediate pipeline. The Edgbaston-headquartered housebuilder has around 3,500 new homes either under construction or in planning.
