Cornerstone Tax has blamed Labour’s policy decisions on its failure to make progress in its mission to deliver 1.5 million homes across the parliament.
Planning approvals have now dropped by 2% to 242,610 in 2024, while construction PMI fell to 44.6, resulting in the worst performance for nearly five years.
David Hannah, group chairman of Cornerstone Tax, is particularly critical of Labour’s refusal to reinstate multiple dwellings relief, alongside its increase in the second home surcharge and higher national insurance contributions, which has made large-scale developments less viable.
He said: “The decision from the government to lower stamp duty bands shows a concerning deficit of joined-up thinking.
“Does this Chancellor and Prime Minister not understand that if they want 1.5 million new homes, they cannot drive landlords out of the market, incur additional charges for first-time buyers and freeze up working capital for developers – which can only be available if these homes are selling?
“I expect stamp duty receipts to fall significantly and then flatline in Q1 2025, potentially plunging the British property market into a desperate situation. In essence, reducing stamp duty thresholds means that it will ultimately be the consumers who foot the bill.
“Furthermore, it would make sense for the new government to suspend, or even abolish, the 5% surcharge where properties are being acquired for private rental sector investment.
“Removing this measure would encourage landlords to increase their holdings, rather than exit the market – reversing the decline in the supply of rental homes and potentially expanding it to the point where demand no longer outstrips supply.”
Cornerstone Tax research said 26% of people are already unable to purchase property due to unaffordable stamp duty costs.
Developers have reduced land acquisitions, and many are operating from fewer sites than in previous years. In 2024, only 9,776 new sites were approved – the lowest figure since records began in 2006.
To meet Labour’s 1.5 million home target the number of planning approvals would need to rise by 53% annually, yet current trends point in the opposite direction.