Last week we delivered an online update specifically for the property and construction sectors, delivered by our head of property and construction Simon Shaw, and Matthew Appleyard, Corporate Tax Director.
Clearly, there are challenges across the sector for a range of sector stakeholders, with inflation, material supply issues, labour costs, interest rates, and uncertainty around house prices, all contributing to the instability within the property and construction sectors.
The outlook for 2023 predicts that demand for new build properties will rise, however, there is a forecast of an 8% reduction in values. Against the backdrop of financial pressures from every angle, the question is, who is going to build the government’s target of 300,000 new homes per year?
However, there are also positives to be found, including:
But whilst 100% mortgages make a tentative return to the market, a stark increase in interest rates will impact new homeowners, who up until now, have been used to sub 1% interest rates, which will mean a shock to the system in the next year or two at the end of fixed rate deals. This, in turn, will knock on activity in the housing sector as cost pressures are realised.
In the face of ongoing turmoil, Simon’s top tips for weathering the storm is to plan, plan, and plan some more, with a particular focus on ensuring a healthy cashflow, with accurate profit and cash forecasts being crucial in light of constrained borrowing and longer payment terms.
In conclusion, construction continues to be vital to the success of the UK, but the cost of living challenges may reduce demand, and whilst costs are likely to stabilities, they’re unlikely to reduce.
Matthew Appleyard, Corporate Tax Director talked about tax impacts that could affect property and construction businesses and mitigating actions businesses can take, together with an overview of taxes that impact the sector including capital allowances, land remediation relief, Stamp Duty land tax, correct business structuring, research and development relief, and other taxation highlights.
You can watch the session on demand below: