Autumn Statement 2023: what does it mean for the housing market?
To cut a long story short, the property market is feeling rather deflated after yesterday’s Autumn Statement, given by Chancellor Jeremy Hunt. It’s a huge shame that The Chancellor did not announce any plans to help boost momentum within the property market specifically, or address any of the obvious current pain points such as the much anticipated Stamp Duty incentives or the long-awaited confirmation around the Renters’ Reform Bill abolishment of Section 21.
Downsizers are crucial in unlocking the property market, but high stamp duty costs trap them in large homes. This limits available stock, keeps prices high, and reduces supply for first-time buyers. A stamp duty incentive is needed to encourage downsizers to move and create momentum, benefiting the entire market. The Autumn Statement did not include this incentive, which is disappointing given the current market stagnation.
Landlords who still feel like they are stuck in limbo as there was no mention of tax relief or any kind support for landlords.
That being said, there are a couple of benefits to the announcement that are focussed on helping struggling families with the cost of living and stimulate growth of the UK economy.
The key takeaways from yesterday’s Autumn Statement
- Starting next year, both employed and self-employed workers will benefit from lower National Insurance rates, resulting in significant savings for millions of individuals. For example, the average salary of £35,000 per year will be around £450 better off.
- The state pension will increase by 8.5% in April 2024 under the triple lock system.
- Increase by 6.7% in Benefits, including Universal Credit, will start from April 2024.
- Local Housing Allowance (LHA) will be updated next year to provide more help with housing costs to some private renters that receive Housing Benefit or Universal Credit. Hunt has made a commitment to raise the Local Housing Allowance rate to the 30th percentile of local market rents, providing an average of £800 in support to 1.6 million households next year.
- Stricter sanctions may be imposed on Universal Credit claimants who fail to adhere to new work search regulations in order to combat "benefit cheats" and increase employment rates.
- The National Living wage will go up from £10.42 an hour to £11.44 an hour. This new rate will apply to all workers aged 21 and over.
- A number of changes to ISA rules are coming for savers. Among them is the ability to contribute to multiple ISAs of the same type each tax year, as well as the option to make partial transfers of ISA funds without regard to when the initial payment was made.
- The Government's guarantee scheme for lenders is being extended, which suggests that 5% deposit mortgages are here to stay.
- Savers may soon have the option to have new employers contribute to their existing pension pots, thanks to a potential new policy. The government is reviewing the idea of granting savers the legal right to receive new employer contributions into their current pension pots. According to the Chancellor, this could lead to the creation of a "pension pot for life".
A moment to reflect
It’s fair to say that yesterday was a perfect opportunity to stimulate property market growth but it was evidently missed despite the improving economic situation. The market was hoping to see some address that would provide a catalyst for the UK housing market activity and to introduce some fresh incentives to get more people moving and buying.
We were pleased to see the extension of the mortgage guarantee scheme as it provides a couple of silver linings, including supporting the timid ‘green shoots’ that are starting to emerge in the lending market. Since its launch in April 2021, the scheme has been used to support 37,800 households. The vast majority, 86%, are first-time homebuyers. The news of this extension, paired with the declining rates that are currently available will be something to celebrate for new homebuyers.
Additionally, a key point to mention that is a positive to many linked to the UK property market is that planning laws will be changing - if planning is slow the applicant gets a refund - a house can be converted into two flats with no planning needed if the external design remains the same.
The unfreezing of Local Housing Allowance rates was some cause for celebration too as LHA has failed to keep up with rising rents, which has resulted in the most vulnerable tenants being priced out of the market for private rentals.
Owner of Cooper Adams Estate & Letting Agents, Shaun says “overall it’s important to consider that as a whole, there are some undeniable positives about the UK economy and the journey it’s been on this year - the economy and incomes have risen, inflation has plummeted, and we are doing well compared to many other economies”
Looking ahead, to the Spring, we would hope to see a direct address that includes Stamp Duty incentives, an address to support Landlords and clarification over Inheritance Tax updates.
Read the Autumn Statement and supporting documents in full