The British Property Foundation has blamed the June abolition of Multiple Dwellings Relief on dwindling construction activity.
The non-profit organisation called for the relief to be reinstated, following data that shows 12,400 more homes were completed in 2024 than started, while construction activity fell by 20% year, according to Savills analysis.
Before it was scrapped Multiple Dwellings Relief reduced the amount of stamp duty paid when investors buy two or more residential properties in the same or a linked transaction.
In the commercial context, a typical example would be the purchase of a new block of flats by a real estate investor.
Ian Fletcher, director of policy, British Property Federation, said: “Increased regulatory and other costs that have faced the sector for the last few years is starting to take its toll on new schemes, as evidenced through a drop in construction starts and new planning applications.”
Build-to-Rent swelling in popularity
The number build-to-rent completions has reached more than 120,000 annually, a 23% increase over the previous 12 months, bucking the wider construction trend.
In the past year, a tenth of all new home completions came via Build-to-Rent developments, twice the contribution it made in 2019.
Fletcher added: “The sector provides housing across the country for a wide range of people, especially since its diversification into low-rise homes for families.
“Investors continue to be interested in Build-to-Rent for the UK market but we need to see policy that encourages schemes to progress and attracts the £250bn of further investment that is needed to meet demand.”
Guy Whittaker, head of UK build-to-rent research at Savills, said: “Starting new sites remains a challenge and the reduction in the construction pipeline is reflective of wider development challenges facing all forms of housing delivery.
“Viability remains a hurdle in the current climate, with elevated debt and construction costs, as does the planning system, particularly in London.
“If these obstacles can be navigated there is no shortage of investor demand to deliver new homes for rent, with more and more investors re-allocating capital from traditional investment sectors to Living sectors.”
