Persimmon boss says tax rises and building safety levy will cost housebuilder up to £40m a year

The chief executive of one of the UK’s largest housebuilders has said tax rises and building safety levies will add up to £40m in extra costs to his business a year.

Dean Finch, boss of Persimmon, has warned the industry faces being hit with “billions” in extra costs, implying this could hamper the government’s efforts to hit its 1.5m homes target.

In comments reported by The Times, Finch said: “There are billions of extra costs coming down the line just when the government wants us to crank up building new homes,” he said. “The [building safety] levy will also apply to the smaller guys. I don’t know how smaller housebuilders will be able to afford it.”

Finch said the levy and the National Insurance employer contribution increase announced in the Budget will add between £30m to £40m to Persimmon’s annual costs.

The levy, expected to come into effect next autumn, will see developers pay a charge on new residential buildings, with funds used to remediate buildings. It is expected to generate £3.4bn.

Finch pointed out the extra costs come on top of the residential property development tax – a 4% surcharge on developer profits – and housebuilders’ own costs to remediate buildings. “We are getting hit three times over”, he said.

Persimmon’s provision for building safety works stood at £283m as of December last year. In March 2023 it signed the ‘developer pledge’ committing it to fixing life-critical fire safety issues in blocks over 11 metres. Last month, it said it had started or completed work on around 72% of its developments known to have remediation issues.

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Neil Jefferson, chief executive of the Home Builders Federation earlier this month criticised the £3.4bn Building Safety Levy.

“This further levy is punitive, targeting small builders many of whom have never even built apartments and poses a threat to jobs, investment and the delivery of private and affordable housing,” he said.

The HBF has said UK housebuilders, with the new levy, will have paid £9.4bn towards building safety works. It has called for other sectors, such as overseas developers and cladding manufacturers, to also contribute.