Jeremy Hunt, the Chancellor of the Exchequer, delivered his long-awaited annual Autumn Statement last Wednesday, bringing an end to weeks of speculative rumours.
The “autumn statement for growth” contained 110 measures which Hunt says will increase business investment in the UK by £20 billion a year over the next decade.
The government's tax and spending plans for the upcoming year, known as 'growth measures', included several welcome initiatives of increased funding in key sectors. However, the absence of housing announcements has caused disappointment among many in the property industry.
This year has seen massive upheaval and legislative challenges within the sector, coupled with soaring mortgage rates and the general cost of living. Many were hoping that last week’s announcement would set the fragile housing market on a clear path to recovery and provide some much-needed support to homeowners and landlords.
Calls for Capital Gains Tax Allowance relief, cuts to stamp duty and an extension of the Mortgage Guarantee Scheme had been circulating prior to last week’s announcement.
However, the property industry was largely left underwhelmed by the Chancellor’s measures for the housing sector, with only a few key announcements made.
The Mortgage Guarantee Scheme, which provides lenders with financial guarantees to cover up to 95% of a house's mortgage value up to £600,000, has been extended by 18 months to June 2025. Originally scheduled to close to new accounts by the end of 2023, Hunt announced its extension alongside the expansion of the Affordable Homes Guarantee scheme.
The Local Housing Allowance also received attention, with plans to increase the rate to the 30th percentile of local market rents. Intended to support individuals receiving benefits in paying their rent to a private landlord, the raised allowance will result in 1.6 million households receiving an average of £800 in support next year.
The Chancellor also encouraged new home building and outlined plans to commit £110 million over the next two years "to deliver high quality nutrient mitigation schemes unlocking 40,000 homes". Additionally, Hunt proposed a consultation into new Permitted Development Rights that would allow for any house to be converted into two flats, so long as the exterior remains unchanged.
Additional announcements included £3 million for a range of measures to improve the homebuying and selling process, but cuts to stamp duty for downsizers and Inheritance Tax reliefs were all disappointingly absent.
Despite initial fears, the housing market has proven to be resilient this year, with more subtle declines in house prices than expected. However, many believe that it is vital to introduce additional measures in next year’s Spring budget to maintain long-term stability in the industry.
The UK's reduced inflation rate of 4.6% and the freeze of interest rates at 5.25% have generated optimism for a shift in the property market in 2024. With growing speculation that the government will finally announce a cut to stamp duty, there is hope that the upcoming Spring budget will help to strengthen the market.
