23 November 2023 – On Wednesday (22 November) Jeremy Hunt stepped up the dispatch box to deliver his Autumn Budget 2023. Among the 110 measures he announced there wasn’t much for the housing market.
Before the announcement of the budget yesterday, there were rumours it might contain stump duty cuts, support for first time buyers and inheritance tax relief. However, everyone hoping these rumours would come true was disappointed.
Jeremy Hunt was mostly silent about the housing market and only some of the 110 measures announced will have a bearing on the property industry.
With no big announcements in the Autumn Budget 2023 to stimulate a slow market, the industry is left with unpicking the various measures to figure out what impact it has on the housing market.
£3m Funding To Improve Homebuying Process
One of the more direct announcements for the housing market was the commitment of £3m to fund various measures to improve the property buying and selling process. While the exact measures involved are not yet known, investment in the development of property technology products will be part of it.
As expected, Mr Hunt also extended the Mortgage Guarantee Scheme until June 2025. This scheme aims at helping people who struggle to save for a large deposit to access 95% loan to value mortgages. It was scheduled to end on 31 December 2023.
Renters will benefit from a rise in the Local Housing Allowance (LHA) rate, with an increase to the 30th percentile of local market rents. The Treasury estimated that this would give 1.6 million renters on average £800 worth of support next year.
This means the freeze of LHA which has lasted since 2020 has finally been lifted, so that it reflects the recent rent hikes better.
The government also aims at streamlining the planning system, according to the autumn statement, so it will launch a consultation into new permitted development rights to enable one house to be converted into two flats.
However, the external appearance would not be allowed to be altered under the plans, which are set to be implemented in 2024.
Mr Hunt also announced the introduction of new premium planning services, which will include providing a guaranteed date for planning application decisions. If those aren’t met, fee refunds would be actioned. This new premium service will be available from 2024.
Homes that are located near electricity pylons or sub-stations will receive up to £1,000 per year off their energy bills.
The Autumn Budget 2023 also contained a commitment to invest an extra £32m across housing and planning to boost the development of new homes.
Stamp Duty Not Even Mentioned In Autumn Budget 2023
So while there were a few titbits for the housing market in the Chancellor’s statement, no major measures were announced to support the property industry.
Stamp Duty wasn’t even mentioned by Mr Hunt. Many industry insiders were disappointed that the rumoured stamp duty cut didn’t materialise.
By failing to cut stamp duty and cut it permanently, the government has missed an opportunity to set the already fragile housing market on a clear path to recovery. Rumours will now grow that we will see a cut in the spring, meaning decisions on buying and selling will be delayed and the economy will suffer.Sam Mitchell, CEO of Purplebricks
Many will also be very disappointed that there was no mention of overhauling the whole stamp duty system.
OBR Expects House Prices To Fall In 2024
The news that the Chancellor hasn’t announced any measures to stimulate the market, will be even more worrying for the industry given the Office for Budget Responsibilities’ (OBR) bleak forecast.
Alongside the autumn statement, the OBR has published its latest economic forecast based on the measures introduced in the budget. The independent fiscal body expects house prices to fall by 7.6% from “peak to trough” by the end of next year.
Although this sounds grim, it’s actually an improvement from their forecast in March, when the expected house prices to fall by 10% from the peak.
While the OBR thinks that house prices will grow marginally by 0.9% by the end of 2023, it expects them to fall by 4.7% in 2024.
After next year, the OBR forecasts that house prices will start to rise again, reaching peak levels from 2022 by the second half of 2027.
Paralle to house prices, the Office also expects transactions to fall in 2024, by 6.9%. Then transactions are also forecast to pick up again and return to pre-pandemic levels at the start of 2027.
All in all, the Autumn Budget 2023 hasn’t really done much for the housing market. Yes, some of the measures included will undoubtedly be welcomed. But like in the King’s Speech, the government just doesn’t seem to understand what the property industry needs.
The fundamental issues weren’t even addressed. No commitment to even look at overhauling the stamp duty system. Not that we here at PropertyRoad think that a stamp duty cut would have been the best thing right now, like other commentators.
The whole system is just not working and needs to be looked at. Affordabilty is so bad that for many young people today the dream of owning their own home is just that, a dream.
There is a lack of affordable housing, which is at the heart of the problem. And this needs sorting out urgently, if we want future generations to be able to get onto the housing ladder.
Housing supply in general is a problem. We just need more homes to be built. The planning system needs to be overhauled and made fit for purpose. While the extra funding is welcome, we would like to know if provisions will be made to ensure that a percentage of each housing development will be affordable housing?
Unfortunately, it seems like this government is just out of ideas when it comes to the housing market. Tinkering around the edges is just not enough.