Property Developers Urge Chancellor to Reform Tax System as Housebuilding Slows

Prominent property developers have called on the UK government to overhaul taxes they argue are undermining the viability of new construction projects. This mounting pressure arrives amid a sharp decline in the number of homes built for rent, a sector seen as vital for addressing Britain’s housing shortage.

The British Property Federation, representing the country’s real estate industry, has contacted the chancellor ahead of the autumn budget with a plea to reinstate multiple dwellings relief. This tax break, which the previous government abolished in 2024, had given investors reduced stamp duty when purchasing multiple properties or a block of flats. Its removal, the federation asserts, has directly impeded delivery of up to 25000 new rental homes, as higher costs now deter investment.

An investor who bought a block of flats for £10 million before June 2024 might have faced a stamp duty bill of about £100,000. Post-abolition, that figure could rise to £500,000. Developers warn the heightened tax risk discourages new builds, sowing uncertainty into the market.

Data from Savills shows the number of rental homes under construction has fallen by 13 percent compared to this point last year. The build-to-rent sector, which focuses on professionally managed flats and houses for let, is also being constrained by council tax rules. New rental homes incur council tax three months after completion, yet it can take over a year to fully let a large development, according to landlords and developers.

Critics say the policy penalises high-density projects, which are delivered far more quickly than traditional housing estates. Melanie Leech, chief executive of the British Property Federation, warned that the government’s ambition to build 1.5 million new homes by 2029 cannot be realised unless tax and regulatory burdens are eased. She stressed that excessive layers of tax and regulation threaten to choke the supply of new homes, directly undermining efforts to support developers and tackle the housing deficit.

While exchequer forecasts suggested abolishing the original relief would yield £300 million annually, industry insiders say this is outweighed by the broader economic impacts of stalled construction. Developers argue that reform would be relatively inexpensive for the Treasury, yet essential if Britain is to meet its longterm housing goals.