Shares in housebuilders Persimmon PLC (LSE:PSN), Vistry Group PLC (LSE:VTY) and Taylor Wimpey PLC (LSE:TW.) fell after reports emerged that the industry could be hit by new taxes and levies.
A new £3 billion tax could be about to hit the housebuilding sector, according to a story in the Sunday Times.
The Building Safety Levy, which was mooted by the previous government in 2021 with a second consultation finished in February this year, is estimated to raise £3 billion from a charge as a percentage of the sales value of new developments.
It will use a rate per square metre sold that will vary by location and differ from the residential property developers' tax in 2022 which was designed to hit only the largest builders.
The new levy seems to apply across all mainstream private developers, said analysts at Stifel.
A "worst case" scenario for the sector over 10 years would amount to around a 4% hit to operating profits, but most of the levy is likely to be passed back to land vendors, Stifel said.
At the time of the Budget, the government promised news on cladding by the end of autumn, and the Times article suggests that the levy was behind that comment but there is still more it could do.
"We wonder if the government may require builders to accelerate remediation," said Stifel.
"This may not be possible, but could still force up the costs of the builders, in which case those with the highest provisions have most to lose, although for most the potential increase in provisions would not be material."