Autumn Budget 2022: What Impact It Has On The Housing Market

Autumn Budget 2022: What Impact It Has On The Housing Market
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22 November 2022 – The long-awaited autumn budget has taken place on 17 November and as expected, millions of people will pay more taxes in the next years.

To save £55bn, the Chancellor, Jeremy Hunt, announced a wide range of tax rises and spending cuts, which will leave most people less well off.

According to the Office for Budget Responsibility (OBR), UK households’ disposable incomes will fall by 7.1% over the next two years, thanks to the measures announced in the statement. This will impact the housing market, as it will make buying a house unaffordable for many.

But there were also some announcements that will have a direct impact on the property market.

Stamp Duty Cut No Longer Permanent

One of the very few announcements from the mini-budget that Mr Hunt has not reversed, was the Stamp Duty cut.

Former Chancellor Kwasi Kwarteng made the change as part of his ill-fated mini-budget that caused thousands of mortgage products to be withdrawn from the market.

He removed the 2% stamp duty for properties between £125,001 and £250,000. For first-time buyers, he increased the price for which they do not pay stamp duty to £425,000.

This tax cut was meant to be permanent, but Mr Hunt now said in his autumn budget, that it will only last until 31 March 2025, when it will go back to the initial stamp duty rates.

This makes it effectively another “stamp duty holiday” and industry insiders warn that it could create another bottleneck of transactions as did the “stamp duty holiday” during the pandemic.

Reversing the cut to stamp duty on properties under £250,000 and £425,000 for first-time buyers is unwelcome news for the housing market. Perhaps one of the only positives to come from the ill-fated mini-budget, the decision to put a time limit on the tax break is likely to create a bottleneck of transactions in the first quarter of 2025 as buyers rush to lock in the more favourable stamp duty rate. 

Nick Leeming, Chairman at Jackson-Stops

Many commentators want to see a reform of the entire stamp duty system, rather than cuts that will increase buyer demand at a time when supply is an issue.

Household Budgets Will Be Squeezed Further

Other measures that will have a direct impact on the housing market include changes to the energy bill support after April 2023, changes to council tax and other tax rises.

We already know that the support with energy bills for households that was introduced by former Chancellor Kwasi Kwarteng will end in April 2023. Now, we know that there will be further support, until April 2024, but prices will rise.

Mr Hunt announced in the autumn budget that the bill for an average household will rise from £2,500 this winter to £3,000 for 12 months from April 2023.

Because there will be no further blanket support payment as this winter, where every household received a £400 rebate on their electricity bill, prices will rise by £900 per year for the average household.

Customers are still charged according to their energy consumption, so for some households the bills will be lower than the average and for others higher.

The Chancellor has also announced that councils will be able to raise council tax by up to 5% without the need of a referendum. This will put further pressure on household budgets.

While there were no actual tax rises for individuals in the autumn statement, millions of people will pay more taxes, because the thresholds for income tax and national insurance contributions have been frozen.

This means, as wages go up, more of the money will go to the tax man. This has been called a tax rise by stealth.

Combined with higher mortgage rates and rising costs of living, many households will be forced to put their plans to move on hold.

First-time buyers are hit especially hard, as they not only have to account for higher mortgage rates, but it will also be more difficult for them to save money for a deposit. So in order to profit from the stamp duty cut, they might need to ask the “bank of mum and dad” for help.

It’s likely to be most challenging for first-time buyers with smaller deposits, as we know it’s currently taking them an average of five years to save up enough for a deposit. The average monthly mortgage payment will be lower if they’re able to raise a bigger deposit, so we may see more people looking to friends and family for help with a deposit to be able to bring their plans forward before the current stamp duty savings disappear in 2025.

Tim Bannister, Director of Propery Science at Rightmove

It is likely that the squeeze on household budgets will slow down demand further and with that prices could fall next year, which is widely expected by many industry experts.


  • News Desk

    Our news desk team includes a qualified architect, a freelance journalist, and a fanatical property expert who has over 12 years experience in the industry.

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