"The data is stark. Without targeted interventions from Government to address the development viability crisis, key priorities such as 1.5 million new homes and the Industrial Strategy will not be delivered"
- Melanie Leech - British Property Federation
The British Property Federation (BPF) has called on the Chancellor to introduce targeted tax reforms and ensure regulatory stability in the Autumn Budget.
In a submission to HM Treasury, the BPF highlighted that the real estate sector contributes £110bn annually to the UK economy and supports one in 13 jobs, yet these gains are at risk due to declining construction activity across all asset classes.
Evidence of the slowdown includes July’s S&P Global UK Construction Manager’s Index, which recorded the sharpest contraction in activity for five years, falling Build-to-Rent (BtR) starts in the first half of 2025, and the September Deloitte London Office Crane Survey showing a second consecutive decline in new office construction.
The BtR sector has been particularly affected. Construction starts fell to 2,600 homes in H1 2025, compared with 18,000 new BtR homes delivered in 2024. The BPF argues that the current tax framework, including the abolition of Multiple Dwellings Relief (MDR) in 2024, has reduced the viability of high-density developments, slowing delivery in areas where rapid build-out is most needed. This decline threatens Government targets to deliver 1.5 million homes and accelerate New Town development.
The BPF’s key recommendations for the Autumn Budget include:
Reinstate Stamp Duty Land Tax (SDLT) support for high-density housing
The 2024 abolition of MDR has hampered delivery, particularly in lower-value areas, stalling up to 25,000 BtR homes. Targeted support would help restore viability.
Extend Empty Property Business Rates Relief to 12 months
Current relief periods of three to six months do not align with actual reoccupation timelines. BPF analysis shows just 9% of empty retail units are re-let within six months, and 83% of commercial properties in seven major cities fall below EPC B, highlighting the need for capital to fund refurbishment and energy improvements.
Remove council tax on newly developed BtR homes
New BtR homes currently face council tax three months after completion, while letting larger developments often takes a year or more. This disproportionately penalises high-density schemes compared with slower-built, low-density housing.
Extend zero-VAT to energy-saving materials
Refurbishment of older rented housing is hindered by VAT rules that only exempt standalone energy efficiency improvements. Extending zero-VAT would improve the financial viability of upgrades.
“The data is stark. Without targeted interventions from Government to address the development viability crisis, key priorities such as 1.5 million new homes and the Industrial Strategy will not be delivered," explained BPF chief executive, Melanie Leech. “As long-term investors in communities across the country, our members want to harness domestic and global capital to support the delivery of New Towns at pace; and invest in more productive workspaces, new homes for all stages of life, and the buildings and public spaces that underpin modern, cohesive communities."
"Yet despite welcome moves to reform the planning system, investor sentiment remains fragile, as evidenced by the collapse in construction activity across the UK. There are simply too many layers of regulation, tax and levies on new development which is at odds with the commitment to ‘back the builders’.”
Leech added, “We appreciate the fiscal pressure the Government is under, but we urge the Chancellor not to underestimate the cost of inaction. The Government will not raise any taxes and levies on development that doesn’t happen. Only by addressing the development viability crisis will the Government unlock the economic growth and investment we need across the country.”
