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New build homes are much more than just the key to housing crisis.

New build homes are much more than just the key to housing crisis.

By Oxford Capital | Aug 7th 2018

The house building industry in England and Wales now worth £38bn a year to the economy

July saw the release of a new report commissioned by the Home Builders Federation, entitled ‘The Economic Footprint of UK House Building’. Its research shows just how important the house building industry is to the UK economy without even considering the ongoing UK housing crisis.

The statistics, based on the 224,000 new homes built in 2017 (still almost 80,000 below the government’s annual target) are striking: The £38bn annual contribution to the economy, of which 85% was generated by private sector housing, includes £2.7bn in tax revenues (via SDLT, Corporation tax, NI, PAYE etc) and £11.7bn spent with suppliers (90% of which stays in the UK).

Beyond hard cash, the sector supports almost 700,000 jobs. The employment market as a whole relies on a good supply of housing for local people to enable them to move jobs freely and match up skills supply with employer demand. Where this doesn’t exist, labour market mobility, and in turn economic growth are adversely affected.

Stewart Baseley, executive chairman of the Home Builders Federation said, “The house building industry is a massive driver of the UK economy and makes a huge contribution to communities across the country. While delivering much-needed new homes of all tenures, house builders are quietly creating and sustaining jobs, generating receipts for the exchequer and boosting investment in infrastructure and amenities in villages, towns and cities.”

House building developers are important supporters of local infrastructure and communities; last year their projects provided £841M towards infrastructure (including £122m for new/improved schools) thanks to Section 106 of the Town and Country Planning Act 1990. The Act allows local authorities to secure investment in essential infrastructure arising from development.

The extra, ongoing revenue produced by additional Council Tax is also a welcome source of income to local authorities as central government tightens budgets. New housing enables populations previously without their own home to acquire one and in doing so to pay Council Tax. Bearing in mind the average Council Tax charge per dwelling in 2016/17 in England was £1,128, residents of the 224,000 additional dwellings built in 2016/17 alone will have contributed just under £253 million of Council Tax receipts.

Local expenditure on goods and services is also boosted by new housing development. The estimated spending of the residents of the net additional homes built across England and Wales in 2016/2017 is £5.9 billion in that year. Then there is a further £1.2 billion of one-off spending on furnishing and decorating the properties. The value to retail and leisure outlets and jobs in local service sectors is therefore significant.

So, the numbers are huge and impressive. But participating in the new-build residential housing market doesn’t have to involve massive investment. Helping to drive the UK economy, while benefiting from the attractive potential returns derived from the substantial demand drivers could be well within your reach; Oxford Capital’s Residential Development Bond targets a 7% p.a return and is available in subscriptions of £10,000. Click here for more information about the Residential Development Bond.


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