Autumn Statement 2023: implications for the housing market

The Chancellor, Jeremy Hunt, delivered his Autumn Statement on 22 November 2023. Rumours of a stamp duty cut did not come to fruition. Instead, some less dramatic measures were announced; here’s how they may impact the housing market:

Extension to the Mortgage Guarantee Scheme

The Mortgage Guarantee Scheme encourages lenders to offer 95% loan-to-value mortgages to borrowers with a 5% deposit. It was due to end in December 2023 but has been extended to 30 June 2025.

The scheme predominantly helps first-time buyers, who are less likely to have a large deposit. Since the scheme started in 2021 it has helped 37,800 households, 86% of which are first-time buyers.

First-time buyers are a key source fuelling the housing market so the extension of the scheme will ensure this continues.

Increase in Local Housing Allowance

To further support low-income households with increasing rent costs, the government will raise Local Housing Allowance rates to the 30th percentile of local market rents in April 2024. This will benefit 1.6 million low-income households, who will be around £800 a year better off on average in 2023-25.

Funding for more homes

The Chancellor confirmed that £110 million will be made available to local authorities, which will boost housing supply by building 40,000 new homes.

New permitted development right

The government is investing an additional £32 million across housing and planning to unlock thousands of homes across the country. This includes additional funding to tackle planning backlogs in Local Planning Authorities (LPA), alongside further reforms to streamline the system through a new Permitted Development Right to enable one house to be converted into two homes.

Wage increases and inflation

Combined, the National Living Wage increase and the cut in National Insurance will increase household income, thereby improving housing affordability.

The Bank of England has predicted that inflation will drop to its 2% target in the first half of 2025, with mortgage rates predicted to drop throughout 2024. If these predictions are correct, we are likely to see an increase in both the number of house sales and house prices next year.

For more information on the housing market, please call 023 8046 1254, or email Tom Young.