The Autumn Statement 2023 - What you need to Know

News at Kerr & Co | 20/11/2023

The Autumn Statement 2023 - What You Need to Know 

Chancellor Jeremy Hunt’s recent announcements at this years Autumn statement has on the whole given some reassurance that the economy is holding up against the significant economic challanges of the past 18 months.  So what changes has her proposed and how will they impact the average person and inparticular those who are finding it hard to rent , buy or sell .

Here’s what you need to know:

Personal Tax And Growth

The Chancellor has announced a reduction in the main employee national insurance contributions by two percentage points, effective from January 2024. This measure is expected to benefit around 28 million people, saving an average of £450 per year for those earning £35,000.

The encouraging news is the economy is forecast to grow modestly in the coming years, with inflation anticipated to drop to 2.8% by the end of 2024. While this paints a positive picture for the overall economy, the impact on the housing market is slowly recovering and so its too early to speculate - however in West London we are seeing confidence returing to the market.

Planning And Housing Initiatives

The government is committing £110 million over two years to facilitate the construction of 40,000 homes. Additionally, £32 million is allocated to address the planning backlog in key cities, and £450 million is earmarked for the local authority housing fund. These measures are designed to boost the housing supply, potentially easing the market for buyers and renters alike. Demand for rental accomodation has outstriped demand so any help for landlords and tenants is very much welcomed.  The Chancellor also promised a consultation into new permitted development rights, which would allow any house to be divided into two flats, provided the exterior remains unaffected.

Renting And Local Housing Allowance

In a move that will benefit renters, the cap on Local Housing Allowance will be raised, making rent more affordable for those on lower incomes. This adjustment is particularly relevant given the steep rise in average rents, especially in London.

Mortgage Guarantee Scheme Extension

A key announcement for first-time buyers is the extension of the Mortgage Guarantee Scheme until June 2025. This initiative facilitates mortgages with small deposits, promoting homeownership among those who might otherwise struggle to enter the market. However, some experts have expressed disappointment at the lack of broader support for those grappling with rising mortgage costs and the economic pressures of the cost-of-living crisis.

Business Tax And Economy

For businesses, including those in the property sector, the Chancellor’s announcements bring mixed news. The permanence of full expensing for Inflation Trends And Expectations

The current forecast anticipates a reduction in inflation to 2.8% by the end of 2024, a significant decrease from the 11.1% peak experienced last year when Chancellor Hunt and Rishi Sunak started their roles at Number 10. Given the ongoing golbal issues in Ukraine and the conflict in Isreal and Gaza the UK economy has continued to be reslient.

The forcast by some economists have indicated that there will be a slower decline in inflation than previously anticipated, with expectations that it won’t reach the Bank of England’s target of 2% until mid-2025, a delay of one year from earlier predictions. As a consequence of this prolonged higher inflation, interest rates are expected to remain at a higher level. The Office for Budget Responsibility (OBR) predicts the central bank’s key interest rate to hover around 4% until 2028, however like all predections they are subject to change.

Our Perspective 

Although we felt the Chancellor could have gone a bit further to help the housing market, the 2023 Autumn Statement brings some positive developments, particularly for first-time buyers through the Mortgage Guarantee Scheme.  We felt more could have been done to support the housing market amidst ongoing economic challenges. We hoped that stamp duty would have been cut as in the Covid years.  Stamp duty and Inhertance tax have been under much speculation. Given the ageing population of homeowners it would certain motivate those individuals who want to downsize as a reduction in tax could help other family members who maybe struggling with affordablity of higher prices and costs in London .

The increased focus on planning and housing development especially in London and other cities is a step in the right direction, but in our opinion a more strategic approach is needed to ensure long-term stability and affordability in the housing market, whilst being sympathetic to our surroundings.  The built environment is here to stay once green spaces have been used, a comprehensive plan for the future is needed.

As the Autumn progresses Kerr and Co have seen the Shepherds Bush and Hammersmith market continue to thrive and remain resiliant .   Our Staff are here to help our clients navigate these changes and support them during their house hunting and eventual move.   Whether you are a first-time buyer, looking to rent or buy, we would be pleased to have a conversation with you on your choices and options relating to the current market trends in Shepherds Bush and Hammersmith .