Reviewing Rachel Reeves’ Budget predictions
On 30 October 2024, Chancellor Rachel Reeves delivered Labour’s first Budget since 2010, outlining their plans to increase public spending and ultimately grow the UK economy. In the weeks before its announcement, hopes were high across the sector that the Budget would address the challenges faced by the housing market. Many industry experts were keen to share their thoughts about what Rachel Reeves’ Budget could mean for mortgage rates, stamp duty relief and other support for first-time buyers, but how close were their predictions to reality?
In this article, we will review the predictions we shared in the weeks before Rachel Reeves’ Budget was revealed, comparing them to the government’s plans while reflecting on how the housing market has been affected.
How did Rachel Reeves’ Budget impact mortgage rates?
The volatility of mortgage rates has caused problems for the housing market since the disastrous mini Budget delivered by Kwasi Kwarteng in September 2022 and most experts were hoping that the latest Budget would finally offer some much-needed stability. Mark Michaelides, chief commercial officer at buy-to-let (BTL) lender Molo, asserted: “Stability from here is the key to settling some of the recent swap rate volatility, which in turn will result in more stable mortgage rates.
“Stable mortgage rates do not necessarily equate to low mortgage rates, in the sense that we do not expect a return in the near term to pre-Truss Budget mortgage rates.”
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While Rachel Reeves’ Budget made no reference to mortgage rates, the market was quick to respond to its other proposals.
Within weeks of the Budget, gilt yields and swap rates had risen rapidly, which in turn resulted in most of the biggest lenders in the UK raising their mortgage rates by an average of 0.35%. Thankfully, mortgage rates resumed their steady decline in the following months, dropping below 5% in August 2025 for the first time since the mini Budget, and it is safe to say that the stability Michaelides hoped for has been realised.
How is the Budget accelerating affordable housing?
Among the most ambitious promises in the Labour manifesto was that they would build one-and-a-half million new homes over the course of the next Parliament, and experts were eager to see the financial plan that would facilitate this undertaking.
Rumours were already floating around that the Chancellor would announce a £500m boost to the Affordable Homes Programme (AHP), but Matt Harrison, commercial director at Finova Payment Mortgage Services, believed it would take more than financial investment to achieve Labour’s goal: “The government should consider offering incentives to developers, including tax reductions for building affordable housing and simplified planning processes.”
Sadly, no such incentives were announced, but the rumoured £500m did come to fruition and was pledged towards the construction of 5,000 new affordable homes. And this was far from the only funding Rachel Reeves revealed in her first Budget.
An additional £128m is supporting the delivery of 33,000 new homes across the country, £47m of which is being invested in the conservation of rivers and wetland habitats to unlock 28,000 stalled homes. This has brought the total investment in the AHP to over £5bn, putting Labour on the right path to produce the homes it promised.
Alongside this funding, allowing councils to retain 100% of receipts from council home sales could create a sustainable funding loop, enabling local authorities to reinvest in social housing and community resources.
Did Rachel Reeves’ Budget extend stamp duty relief?
While the Budget appeared to instil some confidence in Labour’s affordable housing promises, there was concern among experts about whether first-time buyers would be able to get their foot on the ladder. Following the mini Budget in 2022, the exemption threshold for stamp duty land tax (SDLT) was raised from £300,000 to £425,000 for first-time buyers, while the price of subsequent property purchases was raised from £125,000 to £250,000.
This relief scheme was set to end in April 2025, which prompted many mortgage brokers to wonder whether Rachel Reeves’ Budget would extend stamp duty relief to maintain the momentum in the housing market, especially for first-time buyers and downsizers.
John Phillips, chief executive of Just Mortgages and Spicerhaart, expressed the following concerns: “Extending and making stamp duty relief permanent has to be a priority to support first-timers and downsizers and safeguard the market from another cliff-edge deadline.”
For experts like Philips, their fears were confirmed on 30 October when the Budget reiterated that stamp duty relief would still be coming to an end.
Following the reversion to 2022 exemption rates, an estimated 6,000 fewer transactions have been made by first-time buyers, but rather than reintroduce the reliefs, the Chancellor has openly considered ‘replacing stamp duty’ with a new tax on properties over £500,000. Whether this change could reinvigorate the housing market is yet to be seen, but brokers appear to be cautiously optimistic.
Will Rachel Reeves’ upcoming Budget change ISA rules?
Aside from mortgage rates and stamp duty reliefs, many of the mortgage brokers who offered their Rachel Reeves’ Budget predictions to Mortgage Solutions believed that adjustments should be made to the Lifetime ISA (LISA) rules in order to make homeownership more attainable for first-time buyers.
Nick Hale, CEO of Movera, suggested: “The Lifetime ISA price cap of £450,000 is unchanged since 2017, and no longer suitable given rising house prices.”
While no changes to the LISA rules were mentioned in the Budget, the Treasury Select Committee has subsequently announced that the LISA “needs to be reformed” to ensure it can provide benefits to first-time buyers and those saving for retirement. Its stance has seemingly fuelled further discussions about the upcoming Budget and whether Rachel Reeves may still make changes to ISA rules.
Other experts offered their hopes that the home buying process might see reform in the Budget, streamlining transactions to encourage more first-time buyers to enter the market. Maria Harris, chair of the Open Property Data Association (OPDA), said: “Right now, home buying feels like a game of musical statues, with everyone pausing, waiting for what the Budget might bring.
“The real challenge lies in our chronically slow and complex home buying process, which stalls transactions and erodes consumer confidence. But there’s a new sense of hope with the recent Data (Use and Access) Bill announcement – a potential game-changer. This legislation could set us on a path to a faster, simpler home buying journey.”
Unfortunately, neither the Budget nor the Data (Use and Access) Act 2025 instigated any changes to the house buying process; however, the revised act is undoubtedly an essential step towards a connected digital infrastructure.
Did the Budget include changes to CGT?
Ahead of the Budget announcement, many BTL landlords were concerned that potential cuts to capital gains tax (CGT) thresholds or higher rates could push small landlords out of the market. In order to maintain their portfolios, landlords may have been forced to increase rents that were already being squeezed, which could in turn push renters out of the market.
Melanie Spencer, sales and growth lead at Target Group, said, “Mixed messages on CGT have already pushed many to dispose of rental properties. If rumours are true that this now won’t be touched, there’s hope we can stem the flow. Otherwise, it does nothing to help with the price of rent and rental supply, nor does it help the affordability of renters looking to buy.”
Adam Oldfield, managing director at Phoebus Software, presented the following solution to the potential cuts: “Equity release could potentially benefit from the likely changes to inheritance and CGT. There is a strong feeling that people will start to reconsider their position post-Budget and potentially gift their equity to family to reduce their exposure. Otherwise, families may face paying higher inheritance tax bills on property.”
Thankfully, the rumours were true and CGT rates remained at 18% and 24%, while the Budget confirmed a freeze on the inheritance tax threshold until 2030.
