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Autumn Statement 2023: All the property declarations delivered by Chancellor Jeremy Hunt

In today's Autumn Statement, several announcements were made concerning property changes affecting London renters, homeowners, and first-time buyers.


Prior to the Autumn Statement 2023, there was anticipation of potential property tax reductions. These proposals included alterations in stamp duty for downsizers and reductions in inheritance tax.


Individuals expecting tax cuts related to their property transactions will be disappointed.


Among the "110 growth measures" mentioned in Jeremy Hunt's speech, there was support pledged for private renters and alterations in planning aimed at encouraging new construction.


Housing Development


The Chancellor pledged £110 million over the next two years to facilitate the creation of high-quality nutrient mitigation schemes, thereby unlocking 40,000 homes.


Additionally, he committed £32 million to address the planning backlog and facilitate the development of new housing areas in Cambridge, London, and Leeds. This initiative is expected to result in the creation of several thousand additional dwellings. Furthermore, £450 million has been allocated to the local authority housing fund to construct 2,400 new homes for Afghan refugees and alleviate homelessness pressures.


Mr. Hunt also promised to initiate a consultation regarding new permitted development rights, allowing the division of houses into two flats, provided there is no alteration to the exterior.


Housebuilders have scaled back their construction targets since Kwasi Kwarteng's controversial mini-Budget in autumn 2022.


Challenges confronting the industry include the discontinuation of the Help to Buy scheme in October last year, which removed a significant cash infusion for developers. Additionally, soaring mortgage costs have affected the affordability of buyers.


However, many have raised doubts regarding whether these changes are extensive enough to effect significant transformation.


Senior advisor and former Crest Nicholson Chief, Tom Nicholson, remarked, "While the Chancellor's acknowledgment of the planning backlog today seems promising, substantiation is required to verify genuine reform. The housing crisis extends beyond mere numbers; it's about overcoming systemic obstacles. Persistent planning backlogs hinder meeting housing demands. Bridging intentions with actions is crucial for tangible change. A robust framework with mandatory housing targets, streamlined planning, reduced risks, and prompt home construction is imperative. Genuine reform entails navigating regulations, judicious resource allocation, and fostering collaboration among stakeholders. This creates an environment conducive to swift housing development, meeting the urgent needs of the UK."


Mortgage Assistance


The Mortgage Guarantee Scheme, initially set to cease new accounts on December 31 this year, has been extended until the end of June 2025.


This scheme encourages lenders to provide mortgages with a 95 per cent loan-to-value ratio, primarily aiding first-time buyers with smaller deposits. Through this initiative, buyers can contribute five percent of a home's total value (up to £600,000) as a deposit, while the remaining 95 percent is covered by a mortgage. However, income multiples remain restricted to 4.5 times income, limiting the borrowing capacity of buyers.


Nationwide suggested that more measures are necessary to assist first-time buyers in entering the property market and called for an independent review of the market.


Rental Sector


The cap on Local Housing Allowance will be raised to the 30th percentile of local market rents.


Mr. Hunt stated, "Given that rent can constitute over half of the living expenses for private renters with the lowest incomes, I've closely considered input from various sources such as colleagues, the Institute for Fiscal Studies, the Resolution Foundation, Citizens Advice UK, and the Joseph Rowntree Foundation, all of whom have emphasized the urgency of unfreezing the local housing allowance."

This increase is anticipated to provide an average support of £800 to 1.6 million households in the coming year.


Presently, the caps for London housing benefits are approximately £260 per week for a one-bedroom property, £302 for a two-bedroom, and £354 for a three-bedroom.


Unfreezing the Local Housing Allowance rate would enable individuals to seek support in line with their current local rent prices.


The 30th percentile is determined by analyzing 12 months of rental information from the preceding year, setting the rate based on the cost of the cheapest 30 out of 100 homes available for rent.


In essence, this adjustment aims to make the lowest 30 percent of the local market accessible to tenants receiving Local Housing Allowance.

LHA had been frozen since 2020 and was calculated based on rents from three years ago.


Since 2019, average rents in London have risen by 28 percent, adding over £500 per month to the average rent bill.


Will these changes aid struggling first-time buyers and homeowners?

Shadow Chancellor Rachel Reeves criticized the "Tory mortgage penalty," noting a significant spike in payments for those remortgaging since July, averaging £220 per month. She predicted that half a million more homeowners would face similar increases next year.


However, Richard Donnell at Zoopla welcomed the Chancellor's cuts to National Insurance and other taxes, asserting that these actions would positively impact the housing market by enhancing housing affordability and bolstering confidence up to 2024.


Property commentator Anthony Codling, however, questioned the extent to which this additional money would make a difference. He remarked that while the centerpiece cut to Class National Insurance could cover minor expenses like a subscription and a pint, it might not significantly aid individuals in climbing the housing ladder.


The anticipated incentives for downsizing that some hoped would invigorate the property market were absent. Paula Higgins of the Homeowners Alliance suggested that simplifying the conversion of houses into flats could potentially boost private rentals and create appropriately sized homes.


However, she cautioned about the government's track record on extending Permitted Development Rights, citing concerns about compromised quality and insufficient adherence to standards, particularly regarding minimum space requirements. Unlike newly built homes, conversions lack warranties for buyers.


Tim Bannister from Rightmove expressed disappointment in today's statement, considering it a missed opportunity to support home-movers and homeowners. He highlighted the plight of first-time buyers facing affordability challenges and reduced support options, hoping that the government would consider alternative measures in the upcoming budget.


Nick Leeming, Chairman of Jackson-Stops, viewed the Chancellor's actions as neither detrimental nor particularly beneficial to the housing market. He noted the absence of expected announcements supporting first-time buyers, stamp duty cuts for downsizers, and Inheritance Tax reliefs. Despite the market's resilience in house prices, he advocated for further measures to sustain growth and stability in the long term.



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