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Highlights
- The UK government, in its autumn budget, showed a major intent towards spending and new reforms to boost the UK economy.
- The government plans to invest £24 billion in the UK housing market to boost the supply of new homes and meet the target of building at least 300,000 new homes per year.
The UK government announced its autumn budget on Wednesday, which showed its clear intent towards spending and new reforms to boost the UK economy after the Covid-19 pandemic.
Many new investment funds and changes were proposed during the budget for the UK housing sector as well. The government plans to invest £24 billion in the UK housing market to increase the supply of new homes and meet the government target of building at least 300,000 homes per year.
Let us take a closer look at what all announcement was in the budget for the housing sector:
Big push towards affordable housing
The government plans to invest £11.5 billion in building affordable homes in Britain over the next five years. The new investment will help build 180,000 affordable homes with 65% of funds spent on homes outside London’s city. Many housing market experts have welcomed the spending on affordable housing, which will boost the supply of new homes in the market.
Investment in brownfield projects
An investment of £1.8 billion will be made to develop brownfield sites and bring close to 1,500 hectares of land into development. Bringing higher land parcels under construction that will help bridge the gap between demand and supply. Also, the government will spend £65 million on technology to digitalise its outdated planning system.
Contribution to unsafe cladding
The government has committed £5 billion towards removing cladding from high-risk buildings, which will be funded by 4% additional taxes on housebuilding companies with over £25 million profits. Funds towards cladding was a welcome move for thousands of people who leave in flats affected by dangerous cladding.
However, the government has announced no further reforms on the stamp duty holiday, which helped the UK’s Treasury collect over £13.5 billion in the past 15 months. The tax break after the first lockdown helped boost demand for new houses leading to record high property prices in the UK.
© 2021 Kalkine Media
Let us explore 2 FTSE listed housing stocks that will be in focus after the budget announcement:
Barratt Development Plc (LON: BDEV)
FTSE100 listed company is one of the largest housebuilders in the UK and sells its new homes through three consumer-focused brands. The company delivered 3,699 new homes to the buyers between 1 July to 10 October 2021. Also, it has total forwards sales of 15,393 homes valued at £3,936.6 million.
Barratt Development Plc currently trades at GBX 663.80, down by 1.66% on 28 October 2021 at 8:20 am GMT+1 with a market cap of £6,899.39 million.
Berkeley Group Holdings Plc (LON: BKG)
The company operates in the development of residential and mixed-use property in the UK. It reported a profit before tax of £518.1 million for the financial year ended 30 April 2021. The company has increased investment in the new land parcel and currently has forward sales of £1.7 billion.
Berkeley Group Holdings Plc currently trades at GBX 4,314, down by 1.19% on 28 October 2021 at 8:20 am GMT+1 with a market cap of £4,905.41 million.
