Construction and housebuilding boosted by new government measures
With UK construction and housebuilding output on the rise, there’s growing confidence in the sector. And new measures are further increasing confidence and investment. In January 2021, construction output increased by 0.9%, according to the Office for National Statistics. This is following a 2.9% drop in December 2020. In the three months to January, construction output increased by 1.7% compared to the previous three-month period. There is also a growing confidence among construction firms. The industry will likely face a further boost in the coming months with the success of the vaccine program and the loosening of lockdown restrictions.
In the past year, the construction sector has adapted to the challenges brought by COVID-19. Housebuilding in particular is already returning to pre-pandemic levels. And the government has made construction and building a key focus. Prime Minister Boris Johnson's “build, build, build” strategy will plan an important part in the UK's economic recovery. Additionally, some of the announcements made in the Spring Budget are expected to further boost the construction and housebuilding industry.
This is especially important as the sector is a big part of the UK's economy. Tax incentives In the Spring Budget, Rishi Sunak announced a super-deduction on company investments in new plant and machinery assets. The aim of this tax incentive is to encourage investment. This will likely have a positive impact on the wider economy. From 1 April 2021 to 31 March 2023, companies will benefit from a 130% capital allowance. This will allow companies to cut their tax bill by 25p for every £1 of investment.
The construction and housebuilding industry will likely see a direct boost. Jason Tema, director of Clearview Developments, comments: "We welcome the government’s introduction of a super-deduction on company investments. "With the UK’s ongoing demand for quality and affordable housing, we believe that this tax incentive is a much needed boost of confidence for the construction sector; particularly for SME house builders who have been hard hit by the pandemic." Boosting confidence The Ministry of Housing, Communities and Local Government will create a taskforce for modern methods of construction (MMC).
In the budget, Chancellor Rishi Sunak announced £10m of seed funding for this. The aim is to accelerate the delivery of homes built using MMC. Additionally, the stamp duty holiday extension and mortgage guarantee scheme will further boost housebuilding. These measures will likely support more new home sales and further improve housebuilders' confidence. Room for "green" improvement Rishi Sunak announced £12bn of funding for the new infrastructure bank in Leeds. The government says the bank will accelerate the UK’s progress to net-zero.
For many, this is welcome news. However, others in the industry feel there should be more green measures. In particular, many want a retrofit strategy to improve the energy efficiency of existing homes. This is especially as funding for the Green Homes Grant scheme is being slashed. The scheme allowed property owners to apply for a grant to make energy efficient upgrades to their home. The grants funded up to two thirds of the cost of improvements. This was for up to a value of £5,000 per household.
However, the scheme has faced many problems. This included payment delays, administrative issues and a lack of qualified builders. Evan Maindonald, CEO of MELT Property, says: “Despite the Green Homes Grant’s popularity among property owners, the government recently announced that the majority of the initiative’s £2bn funding will be pulled. “Not only is this a major setback for the UK’s housing sector and the government’s net zero strategy; it will also threaten thousands of jobs in the construction sector.
For these reasons, and the fact that there is an ever growing public demand for eco-friendly housing, we do hope that the government will introduce an alternative solution.” Source: Construction and housebuilding boosted by new government measures