WEDNESDAY MARKET CLOSE: Builders hammered in buy-to-let shake-up

Shares in Britain’s biggest housebuilders fell heavily after the Chancellor used his Budget speech to announce that mortgage interest relief for buy-to-let properties will be restricted to the basic rate of income tax.

But the wider FTSE 100 was making a recovery after losing more than 150 points in the last two sessions, following Greece’s rejection in a referendum on Sunday of the kind of austerity measures that could have helped unlock much-needed bailout funds.

The FTSE 100 index rose by 58.49 to close at 6,490.7.

Barratt Developments was the FTSE 100’s biggest faller, down 36p or 5.7 per cent at 594.5p, while rival Taylor Wimpey dropped 9.3p or 5 per cent to 176.2p and Persimmon finished the session 92p or 4.7 per cent lower at 1,876p.

Outside the top flight, Bellway was 161p or 6.7 per cent lower at 2,233p and Crest Nicholson closed 35.5p lower at 513.5p – a decline of 6.5 per cent.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Housing stocks have seen a significant sell-off in the wake of the Budget, as the market weighs the cost of the abolition of mortgage interest relief on the buy-to-let market. This is a significant reversal of fortune for a sector that has prospered since the election of a Conservative government.”

Other stocks suffering in the wake of the Budget included green power producer Infinis, which fell by 16p or 8.16 per cent to 180p after George Osborne said he would remove the “out-dated” exemption from the climate change levy for renewable electricity.

But insurance giant Aviva led the risers’ board as it welcomed a review of claims management companies and a cap on their charges. The stock added more than 3 per cent, or 16.8p, to 497.1p.

Other big risers on the FTSE 100 index were BAE Systems up 15.4p at 460.9p, Glencore up 7.3p at 237.9p and Royal Dutch Shell up 51p at 1,812.5p.