The Chancellor recently used a speech to announce a series of steps to tackle the shortage of affordable housing in Britain, even though, the Pre Budget report concentrated on the big macroeconomics issues of growth, inflation and borrowing. The Chancellor commented that the measures were required to bridge the gap between the 150,000 new houses that are built every year and the 190,000 new households.  It was announced by the Chancellor that there would be new planning guidelines, which would make local authorities speed up consent for housing developments that came up with the design code for quality. 

A promise was made by the Chancellor to introduce tax breaks for the property of Britain’s companies before 2005. This will be in the form of REITS. It stands for Real Estate Investment Trusts. These are tax-efficient investments, which are set up to evolve, contend and sell real estate assets. The commercial property owners of Britain are in favour of REITS. British Land and Land Securities Group have showed that they would be prepared to place in these trusts, their entire commercial property portfolios of Britain, which are more than 15 billion pounds and 10 billion pounds respectively.

The Chancellor also announced that the plan for planning gain supplements, which will tax the profits made on selling the land after planning permission has been obtained. He added that the revenue that would be derived from the tax would be given to the local authorities in order to fund new roads and hospitals. A market analyst David Bexon said that any development that gets more tax would penalize developers for building homes. He added that the homebuilders are required to be encouraged, and not taxed.

The Chancellor said that their design is to make a new consensus across the country on the extension of homeownership and affordable housing. He further said that the public and private sector would work and invest together to strengthen their economy.

The Home Builders Federation (HBF) welcomed the focus on housing, but it cautioned that the main test of the proposals of the Chancellor would be the workability of them. Stewart Baseley, who works with HBF, said that for the next 20 years there’s a possibility that the housing supply could be brought into a better equilibrium with demand and aspirations.  Stewart said that if they aspire to achieve the goal, they need to ensure that they put in place a fiscal environment that helps the industry to make more homes.