Autumn Statement: Property Industry and Mortgage Experts React

by | Nov 22, 2022

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Following Chancellor Hunt’s Autumn Statement, there’s much for property experts to consider from the details he has announced. So what are property and mortgage experts thinking of the details? Experts have been sharing their reactions with IFA Magazine as follows:

Jatin Ondhia, CEO of Shojin, said: “Sunak and Hunt have been caught between a rock and a hard place. The pressure of plugging a £55bn fiscal hole has led to a Dickensian Autumn Statement, which left little room for any rabbits to be pulled out of the hat. While the main focus of these austerity measures is to attempt to patch up the country’s finances without rattling the markets, the giant elephant in the room is that the housing crisis is deepening. 

“The affordability, quality and volume of homes is worsening for residents, as the upwards pressure on rent is being exacerbated by rising demand and a dwindling supply of homes. This is a national issue and one that can only be solved by taking decisive action to support housing development and boost the delivery of new homes. With housing representing the highest living cost for most, we cannot afford for this ongoing crisis to be once again swept under the carpet in the face of mounting fiscal pressures.” 

Paresh Raja, CEO of MFS, said: “With a £55bn fiscal black hole to fill, Hunt’s task today was far from easy. Admittedly, the austerity measures announced in the Autumn Statement will contribute to reducing the deficit. However, the announcement will do little to settle the nerves of those in the buy-to-let sector.

“In the midst of rising interest rates and the aftermath of the mini-budget, buy-to-let landlords are seeing the value of their assets decline, while the cost of borrowing and property maintenance continues to rise. These issues have not been addressed today and are harming the viability of owning a buy-to-let property, which is forcing many landlords to consider selling their properties.

“In fact, according to MFS’ research, 40% of landlords are now planning on selling one or more of their properties in the next 12 months; such an exodus from the market would present an apocalyptic challenge to an extremely competitive private rental sector that is already grappling with rampant demand and a perennial undersupply of homes. Make no mistake, if the Government fails to support buy-to-let landlords in the months to come, such a situation would be catastrophic for renters.”

Ben Woolman, Director at Woolbro Group, said:

“By side-stepping Britain’s crippling housing crisis, the Government has again kicked one of the biggest socioeconomic crises of our time into the long grass.

“The prospect of owning a home is fast becoming an unachievable dream for many. And despite claiming to be the party of ownership, the Tories have done very little to help struggling first-time buyers onto the property ladder.

“It has been well over a year since the then chancellor Rishi Sunak vowed to turn ‘Generation Rent into Generation Buy’. Since then, we have seen house prices surge to eyewatering new highs, soaring mortgage rates and the looming end of the Help to Buy scheme.

“Today, young people are grappling wither higher energy prices, higher food costs and higher private rent prices. There has never been, therefore, a more critical time for the Government to treat the housing crisis with the sense of urgency it warrants.

“Firstly, Britain’s antiquated planning must be reformed in order for the country to build the new homes it so desperately needs. It is not right that new homes for young families are being blocked by local politicians who care only about appeasing anti-development constituents.

“Secondly, a replacement to the Help to Buy scheme must be rolled out as quickly as possible to avoid a slowdown in the construction of new homes over the coming years.

“Failing to act now benefits nobody – not least the Conservative Party, which risks being punished at the polls by those still trapped in the private rental market come the 2024 general election.”

Matthew Jackson, director of Salisbury-based mortgage broker, Mint FS: “This statement has left me slightly ambivalent. I’m both disappointed not to see measures to support the housing market and landlords specifically, but also relieved that this was a competent delivery and that this Chancellor actually managed to find his calculator.”

Jamie Lennox, director at Norwich-based mortgage broker, Dimora Mortgages“The cuts to the capital gains allowance threshold could be the final nail in the coffin for small buy-to-let owners. They’re already facing rising rates and the reality is that they can’t borrow enough on a remortgage to switch lenders. This could lead to a huge sell-off from landlords that could lead to house prices dropping at a faster rate than they already are.”

Gindy Mathoon, founder of Derby-based mortgage broker, Create Finance: “Nothing spells recession more than an increase in taxes. We are facing a year like no other. Get yourself strapped in ready for a bumpy ride ahead.”

Michael Webb, Managing Director at Brandon-based Mortgage Republic“Jeremy Hunt, aka the Stealth tax bomber. The Chancellor, with an election in mind, but a government bank account in tatters, on Thursday froze tax thresholds, the most sneaky way of taxing individuals on their income. The question remains, what now is the government’s incentive to actually reduce inflation, when they are betting the house on it continuing to drive more tax revenue, and reduce the real terms value of their considerable debts.”

Justin Moy, founder at Chelmsford-based EHF Mortgages: It looks like the Chancellor hasn’t meddled in mortgages and property markets too much, which is excellent. Stamp Duty allowances are going to continue at their current tariff for a couple of years at least. Personal taxation allowance changes and freezes, and energy windfall income will help raise income for the government. That negates the need to raid landlords at least for the time being, with one eye on the reduction in Capital Gains Allowance, which may be enough for smaller landlords to consider their position. I would expect mortgage rates specifically to continue their current slow improvement in the short term, but with expectations of a lower inflation peak in 2023, and continued stability within the economy, we should be expecting rates to settle to a more stomach-able level soon. Base rate still has some space to increase to help manage inflation, but fixed rates will meet the base rate shortly.”

Riz Malik, director at mortgage broker R3 Mortgages:

Today’s budget although delivered by Jeremy Hunt was very much Rishi’s. With inflation at the highest rate since 1981, a strong course of action was needed especially considering the OBR says the UK is already in recession and that the housing market will slow. The retention of Kwasi’s stamp duty changes until 2025 will be welcomed by first-time buyers. However, cutting capital gains allowances from next April could accelerate the disposal of buy-to-let property. There could be a buy-to-let bonfire in the next 12 months. Hunt commented that the recession will be shallower and reduced. Coupled with the Bank of England’s expectation that inflation will fall by the end of next year, interest rates could fall. This signals that tracker products’ recent popularity could continue especially if there is a spread between them and fixed rates. With everything that has happened in 2022, the Conservative government are on the last row of Wordle. I hope it works or Jeremy and Rishi may need to start practicing their salsa for next year’s Strictly.”

Jamie Lennox, director at Dimora Mortgages:

“The cuts to the capital gains allowance threshold could be the final nail in the coffin for small buy-to-let owners. They’re already facing rising rates and the reality is that they can’t borrow enough on a remortgage to switch lenders. This could lead to a huge sell-off from landlords that could lead to house prices dropping at a faster rate than they already are.”

Brian Murphy, Head of Lending at Mortgage Advice Bureau said:It’s heartening to see the Government devote a further £6 billion to insulating the UK’s ageing housing stock, as the net zero deadline of 2050 starts loom closer. The responsibility of solving energy efficiency in our homes is yet to be fully claimed, and while it may be a joint effort between homeowners, lenders, councils and the Government, it’s good to see some solid investment promised – better insulated homes also mean lower bills and will go some way to solving the Cost of Living crisis. What will be interesting to note is how easy the Government makes it for homeowners to apply for Government support to improve the efficiency of their homes – previous green home initiatives have seen poor take-up or been abandoned completely”.

Adrian Anderson, Director of property finance specialists, Anderson Harris comments:

In today’s Autumn Statement, Chancellor Jeremy Hunt highlighted the importance of getting inflation and mortgage rates under control before announcing a raft of measures, both tax rises and spending cuts, in an attempt achieve that goal.
“Whilst the medicine will be painful for many, for mortgage borrowers spiralling inflation combined with consequential higher interest rates is punishing and I am hopeful that these steps will result in the Bank of England base rate peaking around 4% as now predicted.
“There is a correlation between house prices and interest rates and we have seen confidence to buy property dip as interest rates edge ever higher impacting borrowers’ affordability, however we have already seen some fixed mortgage rates come down below 5% in the lead up to this Autumn Statement and we expect this trend to continue.”

John Phillips, national operations director of Just Mortgages said: “The budget may seem like a non-event where the housing market was concerned with stamp duty and planning remaining the same. However, it was arguably just what was needed.  With the rest of the economy changing around us, the housing market will now benefit from stability rather than further changes.
 
“With inflation at 11% the housing market may continue to slow for some time but even then house prices are unlikely to be less than they were even a year ago. Now it is time for brokers to address the cost-of-living issues with their clients, ensuring that all their clients have protection in place and reaching out proactively to carry out financial reviews to ensure that their clients are in the best financial position they can be.”

Charlotte Nixon, mortgage expert at Quilter comments:
 
With everyone’s finances stretched at the moment the property market is stalling and house prices are already suffering as a result. The only silver lining from the Truss and Kwarteng’s mini budget was the stamp duty cut. Today, Hunt signalled that while the housing market gets back on its feet over the next two years the cut will remain in place which will hopefully bring some much-needed demand to a market starting creak under the pressure of the cost-of-living crisis.
While some lenders have said that house prices could drop by 10% other estate agents have signalled that after a tricky 2023 the housing market will then rebound. As demand picks up again the stamp duty cut will then be ditched, what effect that has is yet to be seen and will likely depend on how stretched finances remain.
The previous stamp duty holiday brought in during the pandemic was hugely popular and played a major part in artificially increasing house prices but that was during a time when the cost of borrowing was cheap and some people were enjoying more money in their bank account as a result of not being able to spend it out and about.
We are now living in very different times and even with the stamp duty cut in place house prices are likely still to suffer. If by then the housing market is still not back on its feet the government may choose to extend the cut. The housing market should see the stamp duty cut remaining as a lifeline that will prop up demand during what could be a torrid year for the housing market.

Sabrina Hall, Mortgage Adviser & Protection Adviser at Kind Financial Services:

The key to the financial and property markets is confidence. I feel that this Autumn statement will provide some confidence given the additional tax for the highest earners and the windfall tax to the energy companies. However, inflation is still the biggest concern in the economy and given the increase in inflation has been driven significantly by increased energy and food costs I can’t see anything in the budget that will change that.

 

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