Development gains tax will not be welcomed says SmartNewHomes

David Bexon, managing director of, responds to the chancellor of the exchequers pre-Budget report.

Bexon says: The governments plans for a development gains tax will not be welcomed by a homebuilding industry already bearing the brunt of the responsibility for the health of the UK housing market. The onus is already on homebuilders to provide much of the infrastructure for new developments through caveats such as section 106 agreements. The introduction of a development gains tax will see the government further evading its responsibilities whilst developers are effectively penalised for building homes. Homebuilders need to be encouraged, not taxed.

It will be welcomed that councils should now take local affordability and demand into account when formulating their local planning blueprints and they will be obliged to fast-track development plans, but we still await news of how a now archaic planning process is to be further streamlined to ensure these decisions are made efficiently. Revising green belt restrictions and lifting the planning moratoria in the North West are two obvious ways for the government to open up more options to developers and planners.

The news that major lenders and homebuilders will be initiating shared equity schemes for struggling buyers will be welcomed across the country, but the government needs to ensure that there are the right houses available for these people to buy. Starter and family homes are in short supply whilst there is a danger of over-saturating the market with apartments, especially in some city centres. Through the changes to SIPP regulations in April, the government is actually encouraging the wealthy to invest in buying up homes that should be reserved for those less well off.

The policies the government puts into place over the next year have the potential to vastly improve the health of the housing market, but equally, missed opportunities for implementing improvements at this stage will exacerbate the affordability problem.