By Barbara Kollmeyer
Home-building shares fell in London on Wednesday, after housing secretary Robert Jenrick announced new taxes on developers to pay for a government plan to remove unsafe cladding from high rises.
The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -3.64% dropped 0.4% to 6,507.89. That is as the pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.1276% rose 0.3% to $1.3857 on a weak day for the U.S. dollar. Gains for miners and banks weren’t enough to shore up the U.K. index.
Jenrick announced a £3.5 billion ($48.4 billion) plan to help buildings over 18 meters high to replace unsafe cladding. During the Grenfell Tower fire of June 2017, in which 72 people died, flames spread by combustible cladding on the building.
“The government will pay for the removal of unsafe cladding for all leaseholders in high-rise buildings, providing reassurance and protecting them from costs,” Jenrick said in a press statement . To pay for those plans, he announced a levy for “when developers seek permission to develop certain high-rise buildings in England.” As well, he announced a new tax for the residential property development sector.
“This will raise at least £2 billion over a decade to help pay for cladding remediation costs. The tax will ensure that the largest property developers make a fair contribution to the remediation program, reflecting the benefit they will derive from restoring confidence to the U.K. housing market,” said Jenrick.
On the FTSE 100, shares of Taylor Wimpey /zigman2/quotes/208623755/delayed UK:TW -5.40% dropped 2.8% and those of Barratt Developments /zigman2/quotes/209812640/delayed UK:BDEV -3.78% fell 1.4%, with Persimmon /zigman2/quotes/206444744/delayed UK:PSN -4.11% down over 1%.
Across the smaller FTSE 250 /zigman2/quotes/210598417/delayed UK:MCX -3.19% , shares of Countrywide Properties fell 3%, those of Crest Nicholson /zigman2/quotes/207992108/delayed UK:CRST -5.25% dropped 4%, Bellway /zigman2/quotes/208360300/delayed UK:BWY -3.71% shares fell 4%, stock in Vistry Group /zigman2/quotes/208587963/delayed UK:VTY -6.30% fell 4%, and Redrow /zigman2/quotes/206663416/delayed UK:RDW -4.61% shares fell 3%.