What could a stamp-duty holiday mean for construction workers?
With Chancellor of the Exchequer Rishi Sunak weighing up a six-month tax break and an increase in the tax threshold, the housing market – and its workers – could get a boost
So, what is Rishi Sunak up to?
At the moment, the Chancellor of the Exchequer is debating whether the government can offer the nation a six-month stamp-duty holiday. This would allow homeowners, for a limited time, to buy property without paying stamp duty, which can be as much as 12% of the house price after an initial tax-free threshold of £125,000. He is also considering moving that threshold to as much as £500,000 according to reports, so you’d only start paying stamp duty on properties worth more than half a million pounds.
Sounds great for people buying houses, but what’s this got to do with construction workers?
As home builder Berkeley Group said last month: “Housebuilding and construction can play a vital role in the broader economic recovery following Covid-19. This will require government support, similar to that seen following the 2008-09 financial crisis, including: the reversal of the property tax increases seen since 2014, a reduction in the bureaucracy and cost of planning, and direct investment into affordable housing.”
Basically, if we make it easier to buy and build houses, there will be more work for builders to do?
Exactly.
Is this necessary? Everywhere I look, I see new buildings in construction.
I imagine you do. In fact, house building reached a 30-year high in the UK in 2019, with 241,000 new homes built. However, this all collapsed in the first six months of this year as the Coronavirus lockdown stopped many developments and firms put workers on furlough and cancelled jobs.
So, all building work has stopped?
Not quite. It dropped by about 40% as we went into lockdown, and in April and May there was half as much work going on as there usually would be. It’s now back up to about 80%.
That’s much better than some industries, like pubs.
You’re right, it is. Yet, after such a high in 2019 and more than 1 million houses needing to be built to address Britain’s housing shortage, construction businesses are keen to make up for lost ground.
I see. Though to be a cynic, if the government’s not going to benefit from stamp duty when all these people start buying houses, why would they bother to approve it?
It’s about the bigger picture. Though it’s true that a six-month stamp-duty holiday would mean a loss of earnings for the government, it could stimulate the building industry, therefore saving jobs. Do you know how many people work in construction in the UK?
Hey, I’m supposed to be asking the questions here. But, no. How many?
In a government report published in 2013, it estimated that about 3 million people work in the construction industry in the UK, including manufacturing and service roles. That’s 10% of the UK’s total working population. Another report said that construction output in the UK is valued at £110 billion per year and contributes 7% of the GDP. With so many people and so much money at stake, it’s no wonder Rishi is looking for ways to keep it going.
I bet. So when will we find out?
An announcement is expected this week, so keep an eye on Rishi’s Twitter feed.
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