Budget 2026: key implications for landowners and developers

The Chancellor’s latest Budget contains a number of measures aimed at supporting housing delivery and home ownership, although the wider economic backdrop remains challenging. The Budget offers some welcome initiatives for residential developers, particularly around demand side support, brownfield development, affordable housing and planning reform, whilst also creating both opportunities and potential tax concerns for landowners. As the Office for Budget Responsibility (OBR) continues to forecast weaker housing delivery and residential investment, the practical impact of these measures will be closely watched.

A boost for residential development

A new exemption from Biodiversity Net Gain (BNG) requirements is introduced for smaller residential brownfield developments of up to 1.5 hectares. BNG has added both cost and complexity to many schemes since its introduction, and the exemption should improve viability for smaller housing projects and urban regeneration sites. For many developers, this may be one of the most immediately beneficial measures in the Budget

The Government has also committed an additional £1.5 billion to the Social and Affordable Homes Programme, increasing total investment in affordable housing to more than £40 billion over the next decade. This is likely to facilitate further opportunities for developers working alongside local authorities and registered providers, as well as supporting land values where sites are suitable for affordable schemes.

Perhaps the most significant announcement for developers is the introduction of demand side support and assistance in the form of the new £4.7 billion “Your First Home” equity loan scheme, designed to help around 70,000 first-time buyers purchase new-build homes. Together with reforms to savings products for first-time buyers, these measures may support demand in the new-build housing market, giving developers greater confidence to build out sites, although the OBR has suggested that the scheme is likely to have only a marginal impact on the overall housing supply.

The Budget also includes a number of planning and infrastructure initiatives intended to accelerate development, including wider use of AI-assisted planning tools, digitisation of planning data and legislative reforms aimed at reducing delays caused by legal challenges to major projects. While the benefits may take time to materialise, any reduction in planning timescales will be welcomed across the development sector.

Opportunities and considerations for landowners

For landowners, the Budget signals continued government support for bringing forward land for housing and strategic development. Measures to accelerate the release of public land, reforms to the Crichel Down Rules and identification of defence land with capacity for more than 100,000 homes demonstrate a clear focus on increasing the supply land eligible for development.

The introduction of a new zero rate of VAT on land sales to registered providers from April 2027 could be particularly significant for land sales for affordable housing development. Currently, land sales are generally exempt unless the seller has opted to tax, while zero-rating can often only be achieved once development has reached the “golden brick” stage. The change should allow land to be transferred to registered providers earlier without creating an irrecoverable VAT cost, potentially simplifying affordable housing transactions and making affordable housing deals more attractive.

However, not all measures will be welcomed. Property income tax rates are set to increase by a further two percentage points from April 2027, resulting in rates of 24%, 44% and 49% depending on the taxpayer’s income band. This follows increases announced in the previous Budget, and may adversely impact landlords and property investors, potentially reducing investment appetite and placing further pressure on an already strained rental market.

Synopsis

Whilst the Budget stops short of introducing major planning reforms, or changes to Stamp Duty Land Tax, it does contain several targeted measures which should support residential development activity. The easing of BNG requirements for smaller brownfield schemes, substantial affordable housing funding and initiatives designed to stimulate demand all point to a more development-friendly environment.

For landowners, opportunities are likely to arise from increased public investment, affordable housing delivery and strategic site promotion. Nevertheless, ongoing tax changes and the wider economic environment mean that careful structuring and early legal advice will remain essential when bringing land forward for development or disposal. As ever, the success of these measures will depend on whether they translate into improved viability and increased housing delivery on the ground.