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Autumn Statement 2023: Property Market Spotlight

Posted 13/12/2023 by Reeds Rains
Categories: Landlords/Lettings
Key in door

Ahead of this latest budget, many in the lettings industry were hoping that the purchase tax on additional properties and mortgage interest relief might have been reviewed, in order to help landlords’ returns and encourage further investment in Buy to Let. But disappointingly, there was very little in the Chancellor’s Autumn Statement to help boost any of the property market directly.

The three things that could be considered ‘good news’ are:

  1. The Mortgage Guarantee Scheme, which helps ensure the availability of 95% LTVs, has been extended by 18 months and will remain open for applications until the end of June 2025.
  2. Although more information is required, there was a statement that houses could be turned into two flats via permitted development, which is potentially good news for investors.
  3. Those willing to put up with pylons or electrical substations near their property could earn up to £1,000 a year for up to 10 years to help encourage acceptance of upgrades. These are needed primarily to help support the growth of electric charging points.

Two other more small positives that were already in place before the budget are that the Government has committed to zero stamp duty for those buying up to £250,000 (although this doesn’t apply if you buy a second property) until the end of March 2025. And there is also help available for those that are struggling to pay their mortgage via a scheme that means repossession cannot be commenced without the owner’s consent for the first 12 months from a missed payment.

The area that really did need some support from the Autumn Statement is the rental market, which is suffering a severe shortage of properties. As a result of increased regulation, taxation, mortgage and energy costs, some landlords have sold up and fewer investors have entered the market. That has led to higher rents for tenants, with the Office for National Statistics (ONS) reporting a 6% year-on-year increase in England, 6.9% in Wales and 6.2% in Scotland. These figures mean that, for the first time, rent growth is outstripping inflation.

However, there was some ‘indirect’ help for tenants in the form of additional monies, particularly for those on lower incomes. The biggest of these was the change to the Local Housing Allowance which will now be ‘pegged’ at the lowest 30% of local rents, giving extra support of up to £800 a year for those on benefits renting in the private sector. In addition, benefits will go up in England and Wales by 6.7% in April 2024. Pensioners will see an 8.5% increase and the minimum wage will rise to £11.44 an hour for those aged 21 and over. And there will be more money in many workers’ pockets thanks to cuts to National Insurance.

Although these are all welcome increases to income, the general rhetoric is that taxation is still rising and the cost of mortgages, energy bills and maintaining and renovating properties have all gone up substantially over the last 18 months. And with income tax thresholds and the Personal Allowance frozen until 2027/8, the reality is that these latest income ‘boosts’ may not have much positive impact for a lot of people.

But despite no new government incentives and the current economic challenges, the reality is that the property market is performing quite well. Average property prices have grown by 20% since the pandemic, according to the Halifax, and rents are increasing at rates we haven’t seen for years. Affordability is tougher, but that was always going to happen following an increase to the historically low interest rates we enjoyed until the last quarter of 2021.

The good news is that withinflation now at 4.6% and the base rate predicted to start falling again towards the end of next year, hopefully mortgage rates will follow.

As always, anyone investing in property - especially those buying to let - should look at the long term, not an individual year or two. And since ‘micro markets’ within each area continue to perform differently, getting local expert advice for property professionals is as important as ever.


To find out what’s happening to prices and rents where you already have property or are thinking of investing, get in touch with your nearest branch and our lettings and sales experts will be very happy to help.

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