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Spring Budget development update could give the housing market some respite – Hendry

by: Grant Hendry, director of sales at Foundation Home Loans
  • 27/03/2023
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Spring Budget development update could give the housing market some respite – Hendry
For those listening out for the Chancellor, Jeremy Hunt, to address the housing and mortgage market, the private rental sector, house building or indeed, anything vaguely related to our industry, then they might have been sorely disappointed by the Spring Budget.

Hunt did say that mortgage rates are lower than they were in the immediate aftermath of the mini Budget but there was very little else in the way of measures or announcements that directly focused on housing. 

Given that supply is often judged to be the biggest issue facing UK housing, there was however something in the Budget Red Book which is likely to please housing developers.  


A nugget of hope 

This came in the form of tackling ‘nutrient pollution’ which – I’m led to believe – is stalling housing delivery across 74 Local Planning Authorities. This is said to be a barrier to the government’s ambition of delivering 300,000 homes per year. 

The government says it is going to provide “further support to ensure ‘nutrient neutrality’ obligations can be efficiently delivered, thereby reducing the risks facing developers building homes in affected areas”.  

This is a difficult area as nutrient pollution is a consequence of developing land for human inhabitancy, and a danger to the environment. Which is why it’s important that the government investment is spent on understanding the science of truly neutralising the effect of human residence on the natural environment, not just moving goa posts to bypass environmental protection to get around red tape.   

Judging by the immediate response via the UK’s biggest housebuilders’ share prices, this was judged by the markets to be a fairly significant announcement. It may also ensure the government has a fighting chance of reaching that house build target, although just recently a number of major developers announced they planned to build fewer homes than last year in 2023. 


What wasn’t said 

Overall, however, what are we to make of a Budget which didn’t include any of the rumours that had been doing the rounds – most notably, further stamp duty increases for expat and second homeowners, and a replacement for the Help to Buy scheme, which always seemed somewhat fanciful given it is just about to end. 

Certainly, from a buy-to-let landlord perspective, it was positive to see no further increase in stamp duty charges for landlord purchasers, when a hike was being touted.  

I suspect many people within our sector will continue to lobby for cuts to the extra charges, but when the government is making such a significant amount of money from it, then the likelihood of it being cut or abolished completely seems highly unlikely.  

Similarly, the calls to reinstate mortgage interest tax relief for individual landlord borrowers, phased down over a number of years, seems unlikely to fall on anything but deaf ears in the short-term. 

And, while there was plenty of focus on energy, its costs, and mitigating the big increases in recent price rises, there was no further update on what the government plans to do around carbon emissions emanating from the UK housing stock, and most pressing for our landlord customers, when the minimum EPC regulations for private rental sector stock might actually become law. 

In a way, the Budget changed very little for the housing market.  

Albeit with the caveat that, with inflation having risen in February followed by this month’s Bank Base Rate (BBR) rise, it will be interesting to see whether the Office for Budget Responsibility’s pre-Budget forecast for inflation at 2.9 per cent by the end of the year is achieved, and whether future falls in inflation negate the need for any further BBR increases.  

The next few months are therefore going to be very interesting in terms of setting the agenda for the mortgage market and whether we see any further downward pressure on pricing.  

We will all, I’m sure, watch what happens with great interest. 

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