Posted: 30th November 2023

How will the Chancellor’s Autumn Statement affect the property market?

First-time buyers, eagerly awaiting Chancellor Jeremy Hunt's Autumn Statement like a potential early Christmas present, found themselves let down by the outcome.

Early rumours of a cut in Stamp Duty Land Tax didn’t materialise – neither did reductions in Inheritance Tax or Capital Gains.

But there were some positive measures in Mr Hunt’s speech that will provide some comfort for FTBs and homeowners, alike.

Although there was no re-introduction of the popular Help to Buy initiative, the Mortgage Guarantee Scheme for 95% LTV products which was due to end in December, was extended by 18 months to the end of June 2025.

While good news for some, lenders report that many would-be buyers are saving up for the lower rate mortgages which go with higher deposits.

But Mr Hunt also announced tax cuts aimed at putting more money in people’s pockets which will help mortgage seekers with tricky affordability criteria.

Going further than expected, he wiped 2%  off the employee national insurance rate which will mean an extra £450 a year for workers earning £35,400 – cutting it from 12% to 10%.

He also scrapped the Class ll contributions for the self-employed from April 6th next year (saving on average £192 per year) and reduced the rate of Class lV contributions on profits between £12,571 and £50, 270, from 9% to 8%. The government says this reduction will be worth £350 to the average self-employed worker.

National Living Wage rates increased

Other main measures outlined in the statement included planning reforms designed to increase the massive housing supply shortage. He said the Government would invest £110 million in nutrient offsetting schemes – largely considered to be barriers against construction in many parts of the country. And he plans to invest a further £32 million to tackle backlogs on local authority planning departments.

One new measure was a consultation on a new permitted development regulation which will allow property owners to convert houses into two flats.

On the rental side, Mr Hunt raised the Local Housing Allowance to the 30th percentile of market rates – something long-called for by landlords and letting agents and believed to be worth about £800 a year to hard-pressed tenants.  But he declined to take the opportunity to help the Private Sector directly through changes to Capital Gains Tax, Inheritance Tax or mortgage relief for landlords.

Critics have claimed that despite introducing 110 measures for growth, there was precious little in the Autumn Statement for the Property Sector when so many first-time buyers were looking for targeted support.

Other key measures included:

  • £4.5bn investment in manufacturing between 2025 and 2030
  • Increasing the National Minimum Wage to £11.44 an hour
  • Benefits to be uprated by 6.7%
  • Mandatory work placements for jobless people if they don’t find a job after 18 months
  • Increasing the state pension by 8.5%
  • Making permanent the measure that offsets business investment against tax
  • Business rate discounts for the hospitality, retail and leisure sectors worth £4.3 bn
  • Three new investment zones in England and one in Wrexham, Wales
  • A package £4.5bn worth of measures to deliver net zero. 
  • A pledge to explore options for the sale of Government-owned Natwest shares

Mr Hunt based his calculations for the Autumn Statement on the forecast from the Office of Budget Responsibility who reported that inflations was set to fall to 2.8% by the end of 2024 and will not drop below 2% until mid-2025. This is likely to keep interest rates higher for longer. It predicts the base rate is likely to stay at around 4% until 2028.

For further assistance and expert guidance, we recommend consulting a Phillip Mann agent. At Phillip Mann, we provide an extensive range of services for landlords, including an Advanced Rent Option. To learn more, please contact us today.

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