Yesterday’s autumn statement’s headline changes involved a national insurance cut, a living wage hike, and tax breaks for businesses, but what was in it for the housing market?
Sadly for many homebuyers and property investors, Chancellor Jeremy Hunt did not reveal plans to shake up or cut stamp duty in yesterday’s budget announcement, as had been speculated by a number of industry insiders. The current rates and thresholds are currently on hold until June 2025.
Nor were there any big tax changes to encourage more landlords into the buy-to-let sector, which the National Residential Landlords Association (NRLA) and others had been calling for.
The headline events of the autumn statement were linked to tax, though: employee national insurance contributions have been cut from 12% to 10%; business rates for certain sectors will be reduced, while all businesses will keep hold of “full expensing”. Another big shakeup was linked to welfare reforms, which you can read about here.
But there were some elements of the autumn statement that will directly or indirectly affect the property industry, from homeowners to landlords and tenants, and mortgage-holders.
Autumn statement: property announcements
Housebuilding
One of the biggest barriers to the UK’s delivery of more homes – which is leading to an undersupply in many parts of the country – has been planning delays. In recent years, the length of time it takes to gain planning approval for a project has increased, creating a “backlog” in the system.
In the autumn statement, Hunt announced that the government would invest £32m to “bust the planning backlog and develop fantastic new housing quarters in Cambridge, London and Leeds, which will lead to many thousands of additional dwellings”. An additional £450m will go towards the Local Authority Housing Fund for 2,400 new homes.
Permitted Development Rights will also be under review, which should make it easier to convert houses into flats to boost housing supply.
Mortgages
The mortgage guarantee scheme was extended by a further 18 months in the autumn statement, meaning it will be in place until June 2025. It provides a guarantee for lenders to allow them to provide 95% loan to value mortgages, helping more people to get onto the property ladder with a 5% deposit.
One of the benefits of the scheme is that it has allowed lenders to be more competitive, which is positive for the wider housing sector in terms of affordability. Adding more consumer choice increases confidence among those considering buying or investing.
To ensure responsible lending, income multiples are restricted to 4.5 time income.
Rental market
While the private rented sector was not addressed in the autumn statement to the extent that many had hoped for, one positive announcement was that the cap on Local Housing Allowance will be increased to the 30th percentile of local market rents.
This will help those on the lowest incomes, allowing them to claim more support for their rent, which comes as rents across the UK have surged over recent months. Prior to this, Local Housing Allowance had been frozen since 2020, meaning it was out of date compared to the current market.
Reactions from the industry
Paresh Raja, CEO of Market Financial Solutions, had a mixed view of the autumn statement: “You cannot begrudge the Chancellor’s focus on supporting businesses and consumers with tax reforms, but from the perspective of the property market, it was a somewhat uninspired and unimaginative statement.
“Speeding up the planning process and potentially making it simpler to convert houses into flats will be welcomed by some landlords, investors and developers, but more detail is required. Meanwhile, a more drastic overhaul of the planning system seems to have been abandoned, which feels like an important oversight.
“The lack of meaningful property-related announcements is disappointing, given there had been rumours of stamp duty cuts over the weekend. Today was a real opportunity to breathe life into the market and help catalyse growth at a time when economic markets are gradually improving, but that opportunity was missed.”
Meanwhile, Jatin Ondhia, CEO of Shojin, commented: “Housing could not be overlooked today, not after Labour had made such a point of championing housebuilding as a key part of its election campaign.
“Hunt struck some positive notes, such as plans to make it easier for councils to fast-track applications for infrastructure projects, and potentially making it easier for houses to be converted into flats.
“But overall, this was a lacklustre autumn statement for the property sector, with little of substance to excite those building, buying and investing in UK real estate. In the longer-term, at least, I welcome the decision to adopt the recommendations from Lord Harrington’s foreign direct investment.
“We must ensure the UK remains a hub for global investments, so any action to incentivise and remove friction from international investors seeking out opportunities in Britain is a step in the right direction, and the real estate sector could be a major beneficiary.”
Timothy Douglas, head of policy and campaigns at Propertymark, said of the autumn statement: “Propertymark is extremely pleased to see the unfreezing of Local Housing Allowance rates. This is something we have campaigned on extensively and will help those tenants who need support with the cost of renting as well as agents and their landlords renting to tenants on benefits.
“Increasing supply of housing is vitally important so Propertymark welcomes the additional support to local authorities to speed up the planning process and get new homes built. What’s key is that planning has an infrastructure first approach and local communities see new or improved amenities to support increased housing numbers.
“The expansion of Permitted Development Rights to enable someone to create two homes within one house will also help increase the supply of places to live, but is likely to be more workable in some areas of the country than others. Again, what’s key is that issues around quality and safety standards as well as parking are considered for this change to work in practice.”
