Sunak confirmed £5 billion to remove unsafe cladding from the highest risk buildings.
That will be partly funded by the Residential Property Developers Tax, which Sunak said will be levied on developers with profits over £25 million at a rate of 4%.
But the move is not a huge shock: in February the tax was first mentioned as part of the government’s wider plan to bring an end to unsafe cladding.
Numerous flat owners are facing huge bills for fire-safety improvements after the tragic Grenfell blaze in 2017.
Mary-Anne Bowring, group managing director at property management consultancy Ringley Group, said: “A blanket tax on developers is fairer than leaving leaseholders to shoulder the burden but it is still a blunt instrument to use to fix the cladding crisis.”
Lee Nuttall, head of tax at law firm, Gowling WLG, said: “The announced headline rate of 4% is on the high side of the range of expected outcomes but not a surprise given a pre-announced reduction in those developers actually liable to pay the tax. What’s more, the £25 million 'allowance' before the new tax bites will be seen by many as a generous move.”
Shares in housebuilders including Barratt, Bellway and Taylor Wimpey remained in positive territory while the Chancellor was speaking.
Firms will be waiting to hear about further details.
Cory Askew, estate agency chain Chestertons’ head of sales, said: “We applaud the Chancellor’s decision to put £5 billion towards the removal of unsafe cladding; a vital step towards resolving the cladding crisis in our country. “
Askew added: “There are a large number of property owners who are unable to sell due to their home being deemed un-mortgageable. We expected the government to coordinate a solution to this crisis in order to give affected owners hope that they won’t remain in limbo any longer.”
Lawrence Bowles, senior research analyst at Savills, said: “At a time of rising materials and labour costs, and given likely falling transaction volumes next year, it is hard to know what this new levy will raise. It is to be hoped it won’t dampen development activity as home building is already projected to continue to undershoot government targets for the next few years.”