Barratt urges Government to rethink expanded housebuilder fire safety tax

Barratt Developments enjoys strong demand from buyers, and urges Government to rethink expansion of fire safety tax for housebuilders

  • Barratt said expansion of levy would be ‘further punishing’ housebuilders 
  • It said forward sales were £4.38bn against £3.7bn the year before
  • Barratt shares have fallen by around 35% in the past year 

Barratt Developments has urged the Government to rethink its plan to expand a tax on companies to fund the removal of flammable roof coverings from buildings.

In a trading update, the housebuilder, which continues to enjoy strong demand from buyers, said: ‘We urge Government to reconsider its new plans to expand the scope of the Building Safety Levy in addition to the existing Residential Property Developer Tax. 

‘In our view, this is unjust and disproportionate, further punishing UK housebuilders who were not responsible for most of the historical buildings or building safety issues being addressed and fails to effectively allocate the cost of remediation to those responsible.’

Speaking out: Barratt Developments has urged the Government to rethink its plan to expand a tax on companies to fund the removal of flammable roof coverings

Barratt wants the tax to apply to all stakeholders, rather than the small section of builders which have been asked to pay the levy. 

Barratt has so far set aside or spent between £350million and £400million towards the safety of older properties.

The Government has announced that it will extend the Building Safety Levy to raise an additional £3billion. It will be extended to cover new residential buildings in England of all sizes. 

Barratt, which is Britain’s biggest housebuilder, said it was continuing to enjoy strong demand from buyers.    

It said forward sales were £4.38billion against £3.7billion the year before. 

Net private reservations per active outlet each week were 0.93, up from 0.83 a year earlier, and Barratt delivered 4,625 total home completions during the period, down from 4,481 a year earlier. This took the total for the year to date to 12,692.

Barratt said: ‘As previously flagged, the decrease in completions in the financial year to date reflects a return to the group’s normal seasonality as well as the impact of the tapering of the Help to Buy scheme and the original stamp duty holiday deadline, which fell within the comparative period in 2021.’

The group said it was on track to deliver total home completions of between 18,000 and 18,250, including around 750 joint venture home completions.

It expects to have a net cash stash of between £1billion to £1.1billion at year end. 

Looking ahead, Barratt said: ‘Macro-economic uncertainties remain, most notably around the war in Ukraine and rising inflation and interest rates in the wider UK economy.

‘As a business, we also face higher taxation, the ongoing challenges around build cost inflation and the future withdrawal of Help to Buy, which will begin to taper in Autumn 2022, as the scheme draws to a close in March 2023.

‘The board believes, however, that the overall strength of the housing market, our operational performance since the onset of the pandemic and our strong financial position provides us with the platform and flexibility to react to any challenges and opportunities in the remainder of FY22 and beyond.’

Boss David Thomas said: ‘We are seeing strong demand across the country… we expect to deliver full year trading results in line with the Board’s expectations.’

Barratt shares are up 1.47 per cent or 7.1p to 491.50p this morning, but have fallen over 35 per cent in the past year.