The British Property Federation (BPF) has called on the Chancellor to implement targeted tax reforms and prioritise long-term regulatory stability in the upcoming Autumn Budget, warning that a “fundamental and debilitating viability challenge” is putting the delivery of new homes, workspaces, and essential infrastructure at risk.
In a submission to HM Treasury this week, the BPF highlights the real estate sector’s £110bn annual contribution to the UK economy and its role in supporting one in every 13 UK jobs. It warns, however, that ongoing viability pressures across all asset classes are threatening this contribution.
The Federation points to recent indicators, including July’s S&P Global UK Construction PMI, which recorded the sharpest contraction in construction activity in five years, and a continued decline in Build-to-Rent (BTR) starts. The September 2025 Deloitte London Office Crane Survey also reported a second consecutive drop in new office construction activity.
The viability crisis is especially acute in the BTR sector, which plays a critical role in housing delivery. Construction starts fell to just 2,600 homes in the first half of 2025, down sharply from 18,000 BTR homes completed in 2024. The BPF argues that the current tax system is undermining the financial feasibility of high-density housing developments – such as BTR – which can be built out 30–60% faster than homes for sale.
The Federation warns that without urgent policy change, the decline in BTR construction could seriously derail the government’s ambition to deliver 1.5 million new homes during this Parliament and accelerate New Town development.
Ahead of the Budget the BPF’s key asks for the Chancellor are:
Reinstate Stamp Duty Land Tax (SDLT) support for high density housing
The abolition of Multiple Dwellings Relief (MDR) under the previous government in 2024 significantly disadvantaged high density housing developed at scale – and has permanently eroded the value of the asset class – particularly in less valuable areas. The BPF estimates that the abolition of MDR last year directly stalled or hampered the delivery of up to 25,000 BtR homes – and are calling for targeted support to be reinstated, to support the delivery of high density housing.
Extend Empty Property Business Rates Relief to 12 months
As it stands property owners are liable to pay business rates on empty commercial properties after three months for retail and office buildings, and six months for larger logistics buildings. This is insufficient – analysis of 1000 retail locations by the BPF found that just 9% of empty shops are re-let in six months – showing how out of step the current relief is with actual reoccupation times. This not only adds to the risk of speculative development – by hampering viability of developments and refurbishments – but actively takes away capital at the very point property owners need to carry out refurbishment and energy efficiency improvement works. BPF analysis shows that 83% of commercial properties in our 7 biggest cities are below EPC B – underlining the urgent need for sustainability improvements to our commercial property stock.
Remove council tax on newly developed BTR homes
Currently new BtR homes are liable for council tax three months after completion, but the letting of larger developments delivering hundreds of much needed homes often takes 12 months or more. The current system effectively penalises high density housing developments that are built-out quickly – by adding a significant tax cost that wouldn’t occur on low-density schemes which are built out at a slower pace.
Extend zero-VAT for energy saving materials
In order to make the refurbishment of older rented housing stock viable the BPF is calling for all energy saving materials and heating equipment to be zero-VAT rated. As it stands, zero-VAT is only applicable when energy efficient improvements are delivered on a standalone basis rather than as part of a wider refurbishment.
Melanie Leech, chief executive, British Property Federation said: “The data is stark. Without targeted interventions from Government to address the development viability crisis key government priorities such as 1.5 million new homes and the Industrial Strategy will not be delivered.
“As long-term investors in communities across the country, our members want to harness domestic and global capital to support the delivery of New Towns at pace; and invest in more productive workspaces, new homes for all stages of life, and the buildings and public spaces that underpin modern, cohesive communities. Yet despite welcome moves to reform the planning system, investor sentiment remains fragile, as evidenced by the collapse in construction activity across the UK. There are simply too many layers of regulation, tax and levies on new development which is at odds with the commitment to ‘back the builders’.
“We appreciate the fiscal pressure the government is under, but we urge the chancellor not to underestimate the cost of inaction – the government will not raise any taxes and levies on development that doesn’t happen. Only by addressing the development viability crisis will the government unlock the economic growth and investment we need to see across the country.”
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