BPF Spotlight series - Development Viability and the Autumn Budget

💡 “Development viability is significantly constrained in all but our largest cities.”

In our latest BPF Spotlight, our Assistant Director Rachel Kelly shares her insights on development viability and what action the Government should take in the upcoming Autumn Budget to restore confidence, support high-density housing and unlock investment. Over to you, Rachel:

❓How would you describe the current state of the development market, and what’s making it so challenging right now?

🗣️ Development viability is under significant strain across the UK, with most areas outside our biggest cities facing real challenges. While the viability crisis affects all asset classes, the BPF’s Build-to-Rent (BTR) data for Q2 2025 shows only 2,600 rental homes started on site in the first half of this year, compared with 26,000 in 2022. Without urgent action, we risk seeing very few new rental homes delivered by 2028.

❓How could the Government better support high-density housing and brownfield development through the tax system?

🗣️ At a time when the Government wants to deliver 1.5m new homes, the tax system should be supporting, not discouraging, high-density developments on brownfield land. Transaction taxes and levies hit low-value sites hardest, as they are less able to absorb the costs. Reintroducing an appropriate Stamp Duty Land Tax (SDLT) treatment for high-density housing such as BTR would remove a significant barrier to delivery.

Given BTR developments often build out hundreds of homes quickly, it can take time to fully lease new schemes. Yet, newly developed empty homes face a large council tax bill just three months after completion. Removing this charge would better support high-density housing that is delivered at pace.

❓Why is stability and certainty in the policy and tax environment so important for investors at the moment?

🗣️ While cost inflation and higher interest rates have hurt viability, constant changes to tax and regulation have compounded the problem. The removal of Multiple Dwellings Relief, new development levies and costs linked to Building Safety Regulator delays all mean many schemes that were viable five years ago no longer are. This uncertainty also damages investor confidence and the attractiveness of investing in the UK.

Stability must be prioritised. When policy changes are needed, they should include proper consultation and sufficient lead-in times to avoid unintended consequences.

❓If the Government could do one thing in the Budget to unlock more development, what should it be?

There’s no silver bullet to unlocking development, but a top three would be:

🥇 Stop introducing new taxes and levies on development.

🥈 Reintroduce SDLT support for high-density housing.

🥉 Remove council tax and business rates on new developments.

It’s also vital that delays caused by the Building Safety Regulator are addressed quickly to reduce costs and restore confidence in high-rise development.