The chancellor approaches this Budget with little room for manoeuvre.
Vanessa Hale is chief executive of Real Estate:UK
Rising borrowing costs and a difficult fiscal position constrain the scope for major new spending commitments. At the same time, the PM has put growth, and ensuring its benefits are felt in communities across the UK, at the heart of the government’s agenda.
That combination makes this a particularly important Budget for real estate. If the government’s ambition is for growth in every postcode, that growth needs somewhere to happen. It requires new homes and infrastructure, as well as offices, factories, labs and other buildings that will support jobs and underpin the government’s industrial strategy. It follows that development cannot be treated as an outcome of a growing economy; it is a key contributor to it.
Government increasingly recognises this. Since 2024, and partly as a result of the advocacy of one of Real Estate:UK’s predecessors, the British Property Federation, significant progress has been made on planning reform.
The question now is whether the schemes coming through the planning system can be made financially viable enough to build.
Good growth: extending CIL relief would help unlock development and realise more social and economic value for communities
There is no single cause of the viability problem and no single solution. The economics of development are shaped by dozens of factors, some within the government’s control and many outside it. But when schemes are operating at the margins, relatively modest tax or regulatory changes can have a disproportionate effect. Given constraints on public finances, that is our message to the chancellor this autumn.
The Community Infrastructure Levy (CIL) is one example. The industry supports the principle that development should deliver tangible benefits for communities, but the way the CIL is implemented, with the levy payable as development gets under way, means it imposes a significant cost at the point when viability is most finely balanced.
That can be the difference between a project progressing or not. Extending CIL relief nationally would help unlock development and help realise more social and economic value for communities.
Marginal tax changes can make a big difference, too. The removal of multiple-dwellings relief from stamp duty land tax (SDLT) in 2024 affected the valuation of high-density housing, and in turn viability assessments, with 25,000 homes stalled as a result. Real Estate:UK has calculated that reinstating the relief would cost the Treasury just £155m but would provide a significant stimulus to the build-to-rent and student living sectors in particular.
Business rates offer another opportunity for intervention. We welcome the principle behind the PM’s support for pubs: where the tax system is creating acute pressure, the government should act pragmatically while it considers the longer-term challenge of fundamentally reforming the system. Extending empty property relief is another targeted intervention that could have a big impact, with the current relief period of just three months not reflective of the challenges of letting high street and town centre premises.
The government should also look again at the unintended consequences of the higher business rates multiplier.
Designed to help fund lower bills for retail, hospitality and leisure, it will load additional costs on to the large factories, labs and other facilities needed by our high-growth sectors.
There are less visible barriers to address, too. Technical changes to the way investment is taxed and regulated can influence where institutional capital is deployed. Extending SDLT seeding relief, modernising the REIT regime and simplifying the Reserved Investor Fund structure would make it easier to channel long-term investment into UK property.
None of this requires billions of pounds of additional public spending. Indeed, with construction activity at its lowest level since the pandemic, reducing the taxes and levies on development are low-cost levers the chancellor can pull.
If the chancellor can get this right, the benefits will extend well beyond real estate, supporting new homes, renewed places, productive industries and growth in communities across the country.
Vanessa Hale is chief executive of Real Estate:UK
