The UK governments negative rhetoric is affecting the property market by causing uncertainty around possible tax increases in the upcoming Budget, according to Jason Honeyman, CEO of UK housebuilder Bellway.
“There is hesitation in the market right now. Many of our customers are concerned about the October Budget and are delaying their decisions,” Honeyman said. His remarks highlight how worries over potential tax hikes are undermining the new Labour government’s plans to boost economic growth, including their promise for the largest housebuilding programme in a generation.
Honeyman pointed to “mixed signals,” stating that while there is a clear agenda for housing and growth, it is being overshadowed by a more negative outlook on the market. He noted that potential buyers are reacting more to the government’s tone than to specific policy details.
“Most people aren’t fully familiar with IHT, CGT, or NI,” he explained, referring to inheritance tax, capital gains tax, and national insurance. “What they are hearing is that tax increases are on the horizon, and that’s what’s making people uneasy.”
Bellway is predicting a significant increase in home completions next year, once uncertainties surrounding the Budget are settled, thanks to declining mortgage rates. The company’s shares rose by over 8% on Tuesday.
The plc housebuilder reported an almost 50% rise in sales rates since the summer compared to the sluggish housing market during the same period last year, although still below typical autumn levels. Its order book grew to 5,109 homes by the end of September, up from 4,636 a year earlier.
A consistent drop in mortgage rates this year has helped the property market recover from a 10-year low in 2023, when high and volatile borrowing costs kept many buyers out of the market. Nationwide, property sales rose by 25% in September compared to the previous year, according to the property website Zoopla.
While demand improved in the second half of Bellway’s financial year, the company’s revenue dropped 30% to £2.4bn for the 12 months ending in July, with adjusted pre-tax profits falling nearly 58% to £226mn.
Honeyman expressed optimism for a “stronger spring selling season once we get past this political period” and projected home completions would rise by 11%, reaching 8,500 homes by July 2025.
Honeyman has also singled out Angela Rayner the new housing secretary’s drive to create 1.5 million new homes.
“We welcome the new government’s plans to reform the planning system, which in time is expected to unlock land supply and support an increase in new housing across the country.”
Honeyman said “this improving backdrop”, combined with a continuation of stable market conditions, would help the Newcastle-based builder to grow.
In August, Bellway abandoned a £720m takeover bid for its smaller rival Crest Nicholson after months of negotiations.
The Bellway comments came as the government unveiled the £68m funding for local councils, spread over about 54 local authorities. Ministers said it was expected to deliver 5,200 homes on sites such as former car parks and industrial land where it can be difficult to build.