Spring is here, and with it came the much-anticipated Spring Budget, delivered by the chancellor, Jeremy Hunt, on 15 March. So, what was in the Budget, and how will it affect the housing market?
The Spring Budget actually had little direct impact on the housing market. One of the biggest headlines was that the UK is likely to avoid a recession this year, and this means the predicted fall in house prices may be less severe than feared.
This Budget was more focused on boosting employment and the economy than introducing housing reforms. But this is good news when it comes to the property market, because a stronger economy means a stronger property market.
Let’s dig a little deeper.
The number of houses selling, and their prices, tend to be higher when the jobs market is strong, and people have more disposable income. Unsurprisingly, the cost-of-living crisis has led to a slight fall in house prices. With sky-high energy bills, increased interest and mortgage rates and, for many, a real-term pay squeeze, everyone has been forced to tighten their belts.
So the fact that the government has addressed the cost of living, via a three-month extension to the support for home energy bills, for example, is positive news for the housing market as well.
What does the Spring Budget mean for mortgage rates?
Many homeowners will be worried about mortgage rates, which remain significantly higher than this time last year, and are expected to stay elevated until 2024. Although the Budget did not include any specific support for borrowing costs, the focus on strengthening the economy and jobs market is designed to boost household incomes – and this, of course, will be welcomed by everybody with a mortgage.
Healthier incomes will also help with the issue of affordability, which is currently a huge barrier to those moving into, or within, the housing market. However, no significant housing reforms were included in the Spring Budget, meaning that it will take longer for the positive effects of other policies to filter through to the benefit of those battling a lack of affordability.
Does the Spring Budget affect stamp duty?
Stamp duty rates remain unchanged following the Spring Budget. This means that buyers will still pay no stamp duty on properties up to £250,000, with first-time buyers paying no stamp duty on properties up to £425,000.
The threshold at which a buyer starts paying stamp duty was raised to the current level in September 2022, and is set to remain until 31 March 2025.
How does the Spring Budget affect landlords?
There were no major changes for landlords in the Budget, other than an adjustment to the threshold for paying capital gains tax, which has been lowered from £12,300 to £6,000. It will be reduced again, to £3,000 in April 2024.
No direct tax relief support was announced for landlords, despite hopes that this might help more landlords remain in the industry.