Housebuilders fall ahead of housing white paper

Housebuilders Taylor Wimpey and Barratt Developments fell on Monday on the promise of affordable rent measures by the government, building on brownfield land and planning permission timetables, among others measures to be laid out in a white paper.

A white paper is expected to be published on Tuesday that will reveal measures for building more homes to rent with minimum terms of occupation as part of the government's pivot to help renters.

This is to build upon Chancellor Philip Hammond's announcement in November 2016 when he banned letting agents from charging fees to tenants in England.

The whitepaper is to include plans for pensioners who under-occupy large family houses to downsize, incentives for more good-quality accommodation for smaller firms to enter the market which is occupied by larger housebuilders, and plans to protect ancient woodlands.

On news for that there would be property tax breaks for the elderly as they downsize, retirement housebuilder McCarthy & Stone’s shares, on the other hand rose nearly 3%.

There will be measures to build on surplus of government plots, build on brownfield land and for more developments on the greenbelt.

The white paper is also expected to say that housebuilders would have to keep to a timetable to build homes or they may lose their planning permission.

Michael Hewson, chief market analyst at CMC Markets, said that Taylor Wimpey and Barratt “have raised concerns that such measures could lead to a reduction in homes being built as developers try to reduce bottlenecks, which would then have the effect of potentially reducing yearly revenue figures and their ability to slowly release houses onto the market to keep prices stable”.

George Salmon, equity analyst at Hargreaves Lansdown, said: “If the new Chancellor’s ideas to fix the UK’s chronic housing shortage mostly centre on the supply side, the future of Help to Buy and other policies to help affordability could be under question. Reforms also seem likely to favour the smaller players rather than the major builders.”

Shares in Taylor Wimpey were down 1.74% to 169.60p, shares in Barratt Developments were down 1.5% to 494p at 1301 GMT, whereas shares in McCarthy & Stone rose 2.98% to 172.81 at 1337 GMT.