How the chancellor can get housebuilding moving again – and make our homes greener

If the government needed further proof that housebuilding is in crisis, then the new report published by the Home Builders Federation provides it: construction of new homes in England is due to fall to its lowest level since the Second World War, with the supply of new housing likely to fall below 120,000 homes annually over the coming years – less than half of the numbers required. This was further underlined by new data showing house building activity fell for the third month in a row in February.

But not only does the UK not have enough homes, the majority of homes it does have are incredibly energy inefficient. As we strive to meet net zero targets, that level of underperformance is not sustainable.

So with the Budget being delivered on 15 March, what better time for the chancellor to address both these issues?

First, we’d like to see a rethink of the watering down of the National Planning Policy Framework, after the government scrapped the duty on councils to have up-to-date housing plans and demonstrate they also have enough land for five years’ worth of new building. When those changes were announced, close to 50 councils pressed the pause button or immediately reduced their housebuilding plans.

Why not amend the NPPF so that it also includes a specific pledge for a proportion of new homes to be energy efficient and provide incentives for councils to produce such plans?

If stamp duty was scrapped on a zero carbon house, more developers would automatically start building them because it would make them more attractive to buyers

Second, the government could make an immediate impact to encourage more housebuilding – and greener housebuilding at that – by reappraising the tax system. Reforming stamp duty would be an initial step to encourage more housebuilders to go green.

In a recent survey, a third of the public cited rising energy costs as the reason they would buy an energy efficient home. If stamp duty was scrapped on a zero carbon house, more developers would automatically start building them because it would make them more attractive to buyers, especially given the cost of living crisis.

If it wanted to go further, the government should also scrap the Community Infrastructure Levy on zero carbon housing to encourage developers to build greener homes. And it could explore introducing more generous tax breaks for investment funds that are dedicated to financing green housebuilding projects.

Alongside this the government needs to address the skills crunch. Rumours are that the government may make changes to the points-based immigration system to allow construction to recruit more foreign workers. This would be a move that we’ve long called for, as fewer EU nationals and the withdrawal of older workers from the labour market have shrunk the potential industry workforce, with figures showing the number of vacancies at the end of 2022 stood at 46,000 – almost double pre-pandemic levels.

While other work areas in construction are picking up, housebuilding remains sluggish. Action across a range of fronts in the Budget would not only help revive it, but also give a boost to a greener housing stock.

Clive Docwra is managing director of McBains