Chancellor Jeremy Hunt delivered the much-anticipated Autumn Budget Statement on November 22nd, unveiling the UK government’s fiscal roadmap for the upcoming year.
While the Budget is usually the main annual fiscal event due to the announcement of major tax and spending changes, the Autumn Statement looks at the state of the economy -occasionally revealing spending decisions. In this week’s blog, we’re exploring the content of the Chancellor’s statement and its potential impact on the property sector.
UK economic outlook
The Office for Budget Responsibility (OBR) forecasts an average inflation rate of 2.8% by the end of the next year, with a subsequent decrease to 2% by 2025. Projections indicate an overall UK growth of 0.6% in 2023, with an optimistic increase to 0.7% in 2024 and a doubling to 1.4% in 2025.
Although inflation is still persistent and interest rates are higher than forecast in March, the economy has proven to be more resilient to the shocks of the pandemic and the energy crisis than anticipated. The predictions for the coming year are encouraging for UK businesses.
Property developments
Addressing the property sector, the Chancellor has committed to a substantial investment of over £110 million by the end of 2024. This funding aims to facilitate the construction of 40,000 new homes, boosting the nation’s housing supply. Additionally, £32 million has been allocated to tackle the planning backlog and promote new housing developments, particularly in cities like Cambridge, London and Leeds.
Mortgage Guarantee Scheme extension
In a move to support first-time buyers with smaller deposits, the Mortgage Guarantee Scheme has been extended. Initially set to finish on December 31 this year, those entering the property market now have until June 2025 to benefit from this initiative.
This scheme encourages lenders to offer mortgages with a 95% loan-to-value ratio. Buyers can put down the 5% of the total value of a home worth up to £600,000 as a deposit, while the remaining 95% is covered by a mortgage.
Tenant support
Jeremy Hunt has also committed to raising the Local Housing Allowance rate to the 30th percentile of local market rents. This increase is expected to provide an average of £800 in support to 1.6 million households next year. Furthermore, Universal Credit is set to rise by 6.7% starting April 2024.
Construction
The construction industry has responded positively to the Autumn Statement. The most notable announcement for this sector, was the allocation of additional funding to address planning backlogs in Local Planning Authorities (LPA). The announcement also includes a consultation on further reforms to streamline the planning system and a new permitted development right, allowing the conversion of one house into two homes.
Targetfollow
At Targetfollow, we embrace the measures outlined by the Treasury to inject new funding into stimulating the British property market. As property investors and asset managers, we recognise the pivotal role our industry plays in driving economic growth and fostering stability. The government’s commitment to revitalising the property market aligns with our mission to create vibrant and sustainable communities.
Stay informed about our latest acquisitions and sales by regularly visiting our website. Connect with us on Facebook, Twitter and LinkedIn to stay updated on Targetfollow’s ongoing initiatives.
