One of Britain’s biggest housebuilders has urged the chancellor to cut stamp duty on new homes.
Berkeley Group claims the reforms could boost sales and generate an additional £4.2bn for the Treasury.
The developer has used its Budget submission to call for a package of stamp duty changes. It warns that new-build sales are slowing sharply.
Berkeley wants stamp duty capped at 1% for first-time buyers and downsizers purchasing new homes.
It has also called for the 5% surcharge on investors to be removed for new-build rental homes.
The developer estimates the measures could help unlock an additional 60,000 homes a year.
The intervention comes as housebuilders push the government for measures to stimulate demand. Higher mortgage rates, increased development costs and wider economic uncertainty have put pressure on the market.
Berkeley warned that the market risks “sliding over an economic cliff edge” without further intervention.
New-build sales down sharply
The developer pointed to London as evidence of the slowdown.
Just 8,840 private homes were sold in the capital last year, according to figures in its submission. That represents a 56% fall compared with 2022.
Berkeley argues that reducing stamp duty could encourage buyers and investors back into the market. It also believes the move could increase overall tax receipts.
Its calculations suggest removing the 5% surcharge would save a typical investor around £13,000.
Transactions would need to rise by only 7% for the Treasury to recover the lost stamp duty revenue, Berkeley estimates.
However, the developer expects a much larger increase.
Using Office for Budget Responsibility figures, Berkeley claims removing the surcharge could increase sales by at least 30%. It estimates the additional activity could generate a £4.2bn boost for the Exchequer.
The figures are Berkeley’s projections rather than an independent Treasury assessment.
The housebuilder also wants to encourage older homeowners to downsize. It argues this could trigger longer property chains and generate additional transactions.
Although downsizers would pay less stamp duty, other buyers in those chains could still pay the full rate.
Berkeley said new housing also generates tax revenue beyond stamp duty. It estimates each new home produces around £49,800 through taxes and levies.
‘Best and quickest lever’
Rob Perrins, executive chairman of Berkeley Group, said: “Our position has always been that a stamp duty reduction on new-builds – especially around the investor surcharge, first-time buyers and downsizers – is the best and quickest lever.
“This is still needed alongside Your First Home to restart homebuilding in urban areas.”
The proposed Your First Home scheme is designed to help first-time buyers purchase with a 2.5% deposit. A 20% government equity loan would support the purchase.
Berkeley welcomed the initiative but argued it would not solve what it describes as an “acute crisis, particularly in London”.
Other major property businesses have also called for stamp duty reform as the industry seeks to increase transaction levels.
Berkeley said: “If the government wants to increase housing supply as measured against its high-profile commitment to deliver 1.5 million homes this Parliament, there are few policy measures available with the potential to deliver such an immediate impact, whilst sticking to a tight fiscal envelope.”
