Now that 2016’s Budget is a month old, the beancounters have had their chance to digest the contents of the red box.
It’s understandable if contractors paid less attention to changes to stamp duty for buy-to-let homes.
In case you missed it, an average house bought at £275k for buy-to-let will now incur 8 per cent stamp duty, instead of the 5 per cent for an owner-occupier purchase. That equates to an additional £8,250 in costs for a buy-to-let landlord.
So, as a contractor, what does that mean for you?
On the face of it, it might not seem to have much impact. The housing market is still performing strongly, with both house prices and demand continuing to grow. Why worry?
Well, look a little deeper, and the policy has a number of more concerning knock-on effects.
For one, it could easily dampen demand for housing. Economists have seen a surge in housing transactions in the first quarter of the year, with buy-to-let properties snapped up before the changes took effect on 1 April.
As a result, there will be a corresponding dip in Q2 and Q3 this year – something to look out for when planning.
What’s more, demand for the types of properties buy-to-let landlords favour – one and two-bed flats or older properties that can be refurbished - could drop off.
PwC’s chief economist John Hawksworth told Construction News that this is especially likely in strong buy-to-let focussed markets like London.
For refurbishment properties there’s likely to be even more downwards pressure.
There won’t only be a drop in demand for the properties to begin with, but also a decline in spending on these properties once purchased.
The private housing repair and maintenance market is vitally important to the construction industry, and was worth nearly £17bn in 2015.
But when landlords will be paying an additional £8,250 in stamp duty on an average property, that figure could start coming down rapidly.
It won’t be as easy to spend £10,000 doing up a property when you’ve already shelled out an extra £8,250 on stamp duty.
R&M isn’t reliant entirely on the private housing but that doesn’t mean that this decline should be ignored.
Total housing R&M work added up to £24bn last year, and if a large chunk of that is chipped away, it could have serious consequences for construction activity across the board.
Read full analysis of how the changes will affect you here.
Also in the news
Deputy news editor Robyn Wilson reveals that Willmott Dixon has been replaced on two housing association contracts, one of which is worth £147m.
This week’s project report is also online now – find out how Galliford Try is turning a medieval site into office space for Northampton County Council. There’s even a video to go with it.