Sector fears Budget will hit construction

With less than an hour to go before Chancellor George Osborne begins delivering his budget, the construction industry is on tenterhooks to see what the future will hold.

Some in the sector fear the government’s trailed Stamp Duty rise could hit the sector in a less than positive way.

John Hitchcox, chairman of global property firm Yoo said that cutting Stamp Duty had been “one off the best things” the Thatcher administration had done.

“Hiking stamp duty may seem like a good thing by hammering the rich but it will hinder growth by encouraging people to stay in existing homes rather than moving,” he said.

“As we’ve analysed to death recently, construction is one of the biggest drivers of our economy. If people move house, there’s a need for construction and all the services related to home moving.”

Sue Foxley, head of research at Cluttons, said the proposed 7% stamp duty level would hit Londoners hard.

“There is a massive shortage of family homes in London’s villages and given price growth expectation, growing demand will push average three and four bedroom family homes in many areas such as Islington into the top stamp duty tier within a year or two, making it even harder for families to commit to staying in the city,” she said.

“There will certainly be a rise in the number of people looking for a renovation project priced beneath £2 million, preferring to spend their money on improving their home and potentially getting it back when they sell, rather than handing an additional 2% over to the Treasury.”