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Unexpected Frights Averted for Landlords in Autumn Budget

Rachel Reeves, in a historic moment, unveiled the long-awaited Autumn Budget as the first female Chancellor of the Exchequer. Despite tough decisions, she outlined a promising future for the property market. The Budget was officially presented at 12:30pm.

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Unexpected Frights Averted for Landlords in Autumn Budget

The recently announced Autumn Budget of 2024 has brought a series of measures aimed at revitalising the UK's housing sector, with a focus on affordable housing, supporting small builders, and easing mortgage regulations. However, industry experts predict a mixed impact on the housing market, with optimism about transaction volumes but caution about price growth and market stability.

Labour's commitment to the housing sector includes a substantial £5bn government investment, starting with an increase in the Affordable Homes Programme to £3.1bn. This investment will extend to renovating sites across the country, such as Liverpool Central Docks where 2,000 new homes will be delivered.

However, the rise in employers' National Insurance contributions could add to the costs faced by housing associations and other elements of the supply chain, potentially hindering the industry's ability to take on and train new staff, as expressed by the National Federation of Builders (NFB).

The Budget also offers a five-year social housing rent settlement, with the possibility of a 10-year settlement after a consultation process. This settlement, set at CPI+1%, is intended to help ease financial pressures in social housing. Labour has also pledged to reduce Right to Buy discounts and allow local authorities to retain the full receipts from any sales of social housing.

In an effort to boost transaction volumes, the easing of mortgage regulations announced or expected around the Budget should help more buyers, particularly first-time buyers, enter the market. This is anticipated to lead transaction numbers back toward the post-financial crisis norm of approximately 1.2 million per year by 2027.

Experts forecast a 24.5% rise in average UK house prices by 2029, equating to about £86,300 increase. However, growth in 2025 is expected to be subdued at around 1%, down from earlier forecasts of 4% for the year. The strongest house price growth is expected in areas like the North West, Scotland, and Wales, while London and the South East are forecast to experience slower rises.

Despite some easing in lending, first-time buyers still face challenges due to relatively high mortgage rates and lender hesitation. The market may continue to experience regional disparities and affordability pressures for some time, as the path of interest rates remains uncertain with higher-than-expected inflation causing caution among policymakers.

The recent slow buyer activity and geopolitical factors add to this uncertainty, as does the ongoing volatility in the buy-to-let market, with conflicting data on lending, repossessions, rent increases, and available rental properties.

In conclusion, while the Autumn Budget’s regulatory adjustments are intended to stimulate housing transactions and support affordability, experts remain cautious with house price growth forecasts reflecting a slower, uneven recovery influenced by wider economic and policy uncertainties. The housing market is expected to see improvements in transaction volumes, but may continue to experience regional disparities and affordability pressures for some time.

[1] Savills (2024). UK Housing Market Outlook 2024-2029. [Online] Available: https://www.savills.co.uk/research-and-insight/market-research/uk-housing-market-outlook

[2] National Housing Federation (2024). Autumn Budget 2024: What it means for housing associations. [Online] Available: https://www.housing.org.uk/news-campaigns/news/autumn-budget-2024-what-it-means-housing-associations

[3] Halifax (2024). First Time Buyer Report 2024. [Online] Available: https://www.halifax.co.uk/mortgages/ftb/reports/first-time-buyer-report/

[4] The Residential Landlords Association (2024). Buy-to-Let Market Update 2024. [Online] Available: https://www.rla.org.uk/policy/buy-to-let/buy-to-let-market-update/

  1. The Autumn Budget of 2024 includes policy-and-legislation focused on subsidizing the UK's housing sector, such as increased funding for the Affordable Homes Programme and a five-year social housing rent settlement.
  2. The housing industry anticipates a mixed impact on the market due to the announced changes, with optimism about transaction volumes but caution regarding price growth and market stability.
  3. The Budget's easing of mortgage regulations is designed to encourage business in the housing market, particularly among first-time buyers, although challenges like high mortgage rates persist.
  4. Some experts predict a 24.5% rise in UK house prices by 2029, although growth in 2025 may be slower as a result of continued economic and policy uncertainties in the general-news landscape.

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