After much speculation, Chancellor Rachel Reeves has delivered her Spring Statement to Parliament, following some rather welcome news that the rate of UK inflation had fallen for the year to the end of February to 2.8%.
However, Reeves hasn’t exactly been awash with good news otherwise in her commitment to economic growth. With global economic uncertainty, UK growth remaining sluggish and the fiscal headroom she thought she might have last Autumn, now being cut, cuts to government departments – particularly the welfare budget – were firmly on the agenda as she announced her spending plans.
On a more positive note for the property sector, Reeves’ plans for planning reforms and housebuilding to boost the number of homes built and designed to boost growth, might provide some respite – although they will take years to actually fulfil.
Many Mortgage and Property experts’ eyes were on the OBR forecasts today – which was expected to cut its forecast for UK growth which has been downgraded by half for this year to 1%, giving the Chancellor even more of a headache, and less scope for more expansionary measures.
What is the industry saying?
Sharing their reaction to the measures announced today, Mortgage and Property experts have been commenting as follows:
Tony Hall, Head of Business Development at Saffron for Intermediaries, comments on today’s Spring Statement saying:
“Today was a missed opportunity to help the estimated 75,000 people who are expected to miss next week’s stamp duty deadline. As a result of the existing backlog, we’re hearing from brokers that cases opened as early as January are unlikely to close in time, dealing unexpected tax blows onto many prospective homeowners. We should be helping these people get onto the property ladder – for instance, through progressive affordability criteria that takes into account rent payments – rather than creating more hurdles for them to overcome in order to realise their housing aspirations.
“That being said, a silver lining from today’s Spring Statement was planning reforms taking centre stage, with the Chancellor setting out ambitious plans to build 1.3 million homes in the UK over the next five years. However, while the commitment to accelerate housebuilding is welcome – especially 18,000 social and affordable homes – there is apprehension from the market on whether these targets can realistically be met, given the structural challenges that have long constrained property development.”
Matt Thompson, head of sales at Chestertons, says: “We have met a lot of first-time buyers who held out hope for the Chancellor to make a U-turn on stamp duty thresholds in today’s Spring Forecast. As this hasn’t been the case, first-time buyers will now have to ensure that their budget can cover the cost increase which means some might compromise on location or type of property. Although the rush of first-time buyers that the market has seen earlier this year has slowed down, demand remains strong as mortgage rates are still attractive enough to motivate buyers to get on the property ladder.”
“Earlier this year, the news reported an exodus of wealthy individuals from the UK amid the abolition of Non-Dom tax breaks. Although the Chancellor decided to soften those changes, it had already alienated a demographic that is key to the UK’s long-term economic growth. We are pleased that Rachel Reeves has taken the backlash into consideration and decided not to introduce a mansion tax for the time being which could see some HNWIs deciding to stay or return to the UK.”
Ben Thompson, Deputy CEO, Mortgage Advice Bureau, on how the Spring Statement will impact prospective and current homeowners said: “While the Chancellor has reinforced the government’s commitment to get Britain building again, and declared that households will be £500+ a year better off on average, there was little else for aspiring first time buyers or home movers to get excited about in today’s Spring Statement.
“The focus now must shift towards more direction and innovation from regulators and lenders to support a larger pool of borrowers and open up the housing market. Responsible lending proposals to consider relaxing affordability criteria and LTI caps, and the development of mortgage products that focus on rental track records are just some of the options that would be welcomed with open arms, making homeownership more accessible and affordable.
“We’ve also long campaigned that those who buy or retrofit their homes to a higher EPC rating should be rewarded. This is alongside pushing for more concrete investment to encourage retrofitting 29 million of UK homes. We believe this can be achieved through offering a Stamp Duty refund to those who buy and then retrofit to an EPC rating of C or above, and we hope this will be reconsidered by the government in the future.”
Commenting in response to the Spring Statement today, Timothy Douglas, Head of Policy and Campaigns for Propertymark, said: “The Spring Statement had a clear focus on the vital role housing plays in the UK economy and as part of the UK Government’s plan for growth, so it is encouraging to hear that planning reforms will boost national income. However, workforce challenges remain and it’s vital that local councils have the resources required to deliver effective planning and infrastructure so communities up and down the country and the wider economy really benefit.”
Paresh Raja, CEO of Market Financial Solutions, said: “Overturning outdated parts of government to improve efficiency has been a major focus for Labour since the election, and planning reform was raised again as a key part of this agenda. However, the “get Britain building” rhetoric must now translate into tangible action – bringing in new construction workers is a positive step, as the Chancellor had already announced three days ago, but much of today’s speech involved repeating the Autumn Budget’s plans to encourage housebuilding.
“Reforming the planning system is obviously important. However, investors and developers are unlikely to commit to new projects unless they see a strong and growing economy that provides long-term confidence and a return on their investment. The OBR forecasts were a blow in this regard, and the onus must now be on turning the corner to turbo-charge GDP growth.
“House prices are rising, inflation fell in February, and the base rate is expected to come down further this year. These are all positives, highlighting that the property market remains bouyant, and this is important given how significant the sector’s contribution to GDP is. In future statements and budgets, we need the Chancellor to focus more energy on supporting homebuyers and borrowers, which will further stimulate growth in the market.”
Tim Parkes, CEO of RAW Capital Partners, said: “It might not have the standing of the Autumn Budget, but the Spring Statement was an opportunity for the government to set out a bold vision for growth nonetheless. However, today’s speech highlighted that there remains a keen focus on fixing legacy issues, both with the state of the economic and within the property sector, most notably where housebuilding is concerned. This is, of course, important. But the UK also needs a more proactive and forward-thinking strategy to meaningfully encourage economic growth.
“Creating the right conditions for investment should therefore be the government’s top priority if it hopes to attract both domestic and international capital. This means not just stabilising the economy and filling the fiscal blackhole, but fostering an environment where businesses and investors feel confident to commit to the UK for the long term.
“But the government can’t do it all on its own, so specialist lenders have a key role to play in facilitating overseas investment into UK property and contributing to a growing economy. By offering a tailored approach to lending and bespoke financial products, they can help international investors navigate the market with greater confidence, while reinforcing the UK’s position as a prime destination for investment.”
Ahead of the Spring Statement, the Chancellor had announced she is injecting £600m into construction training as well as a £2bn boost for investment in affordable housing.
In response to that news, Andy Rayner, Director of Learning and Development at Travis Perkins Plc says: “It’s encouraging to see the Government recognising the importance of skilled trades in delivering the UK’s housing ambitions. The construction industry has been facing significant challenges due to ongoing skills shortages, which have impacted the speed and scale at which projects can be delivered.
“An investment of this scale into construction training and recruitment is not just a step in the right direction, but also a long-term commitment to the future of the industry.
“Equipping the next generation with the right tools, training, and opportunities will help address critical gaps in the workforce, strengthen the supply chain, and support the industry in meeting ambitious build targets with greater confidence and resilience.”
