Autumn Budget: Landlords avoid unexpected scares this Halloween
Rachel Reeves has finally revealed the highly anticipated Autumn Budget. Whilst ‘difficult choices’ were made; the future of the property sector looks positive.
At 12:30pm Rachel Reeves made history as she became the first female Chancellor of the Exchequer to deliver the government’s Autumn Budget. Taking to the stands in the House of Commons she announced Labours plans to rebuild Britain, reform the NHS and restore stability.
If it wasn’t enough that Reeves had to deliver the Budget at a time when the majority are struggling, the heckles and shouts from other ministers that constantly interrupted the speech made the job ten times harder.
How will the plans affect the housing industry?
Addressing the Commons Reeves announced that Labour will provide over £5bn of government investment to the housing sector, starting with increasing the Affordable Homes Programme to £3.1bn.
Reeves said: ‘We will provide £3bn worth of support in guarantees, to boost the supply of homes and support our small house builders.
‘And we will provide investment to renovate sites across the country, including at Liverpool Central Docks where we will deliver 2,000 new homes and funding to help Cambridge realise its full growth potential.’
As well as helping smaller homes providers, Reeves added: ‘Having heard representations from local authorities, social housing providers and from Shelter, I can today confirm that the government will reduce Right to Buy discounts and local authorities will be able to retain the full receipts from any sales of social housing, so that we can reinvest them back into the housing stock and into new supply.’
On the topic of social housing, within the Budget Labour plans to introduce a rent settlement of CPI+1% for the next five years to help ease financial pressures.
The Budget also confirmed £47m of funding to support the delivery of up to 28,000 homes that would otherwise be stalled due to nutrient neutrality in affected areas.
Industry experts reactions
Since the announcement, it’s fair to say experts involved in the property sector have a few things to say.
Richard Beresford, chief executive of the National Federation of Builders (NFB)
‘The 2024 Budget was always going to be challenging due to the ongoing £22 billion black hole narrative. Nevertheless, it is positive to see the suspected fuel duty rise did not happen, especially as the construction industry is already paying considerably higher fuel costs after the last government cut their access to red diesel.
‘We also welcome the £5 billion funding boost for affordable housing, commitment allowing councils to retain 100% of Right to Buy receipts and, the £3.4 billion for retrofitting.
‘However, the Government’s target to deliver 1.5 million homes is now at a considerable risk due to the increase in Employer National Insurance contributions. This announcement will hinder the industry’s ability to take on and train new staff and support the next generation of skilled workers. While some may point to planning reforms as the solution, those reforms have not yet been implemented, and it will take years before new projects avail of them.’
Nigel Wilcock, executive director, Institute of Economic Development
‘Whilst headlines on today’s Budget may still focus on tax raising, the Chancellor is hoping that her measures will restore stability to public finance and provide additional funding for public services. For local government, the immediate injection of £1.3 million additional grant funding for essential services is welcome, but the spring 2025 spending review will need to address the precarious state of local government finances in the longer term.
‘From an economic development perspective, the multi-year funding settlements for priority sectors, linking to the modern industrial strategy to unlock the growth industries for the future, are a step towards recognising the importance of the profession. We are also pleased to see the funding commitments to devolution, local plans, housing, infrastructure, and business rates relief. This is a budget that speaks to a desire to boost long-term economic growth, but there is more to do.
‘Beyond that, a promise of multi-year settlements to secure the sustainability of local services and functions from next year, as the vehicle for funding competitions to end, should remain on the table. Economic development professionals have a critical role to play in supporting the acceleration of growth in regions and clusters of growth sectors across the UK.
‘In our Grow Local, Grow National manifesto published prior to the election we set out those areas in which local places could help deliver on the growth ambitions of the new government. Building the capacity at a local level to identify and manage those growth projects which will provide a financial return in the future must be reflected. We also believe that the local growth solution is at least partly about how funds are allocated rather than the overall expenditure level.’
Lee Bloomfield, chief executive, Manningham Housing Association
‘The Chancellor’s confirmation of £500 million of new funding for the Affordable Homes Programme is certainly a positive – increasing it to £3.1 billion – but, given the additional money will deliver only 5,000 of the 1.5 million new properties Ministers have committed to provide over the next five years, it is merely a drop in the metaphorical ocean.
‘The promised five-year social housing rent settlement will offer a degree of much-needed financial stability for housing associations, with the possibility of a 10-year settlement after a consultation process.
‘However, the rise in employers’ National Insurance contributions will not only add to the costs faced by housing associations, it will also impact on all other elements of the supply chain which will be expected to deliver the many new homes so desperately required.’
‘I sincerely hope that the Chancellor has not made a decision she will come to regret.’
Guy Gittins, CEO, Foxtons
‘Landlords across the nation have been impacted by a raft of legislative changes in recent times and so they will be delighted to see that Capital Gains Tax increases have not been applied to the sale of residential property portfolios.
‘We’ve already seen buy-to-let investors return to the lettings market and today’s Budget should reassure many more to remain within the sector. This is good news for tenants across the capital in particular, as it will deliver desperately needed additional stock back to the market.
‘That said, the additional stamp duty charged on the purchase of second homes will add to the upfront costs of investing for those looking to grow their portfolios, however, the scale of the increase is unlikely to deter landlords considering the long term gains of this asset class.
‘Homebuyers will be understandably disappointed, but not surprised, about the lack of a stamp duty relief extension, with the current thresholds set to revert back as of March next year. However, as they have already factored this into their purchase plans we do not expect it to impact the strong demand we’re currently seeing in the market.
‘Today may not have been the Autumn Statement we were hoping for, but it has been what we largely expected.
‘As a result, we can expect the heightened level of market activity seen this year to continue, with market momentum strengthening as we head into 2025, further elevated by forecast interest rate reductions.’
Philip Silk, development director, Conrad Energy
‘There are lots of welcome measures in today’s Budget and it’s good to see that the government continue support for the development of green hydrogen. I wouldn’t say we’ve broken entirely new ground as there was a fair amount of reiterating previous commitments, but today’s Budget clearly keeps us on the path to decarbonisation.
‘The protracted approval process has been a pretty sizeable barrier to development for some time. It might not sound glamorous, but setting aside additional funding for extra planners could reduce delays and so can only be a good thing.
‘Opening the cheque book for new projects is of course vital, but there is still the fundamental problem of how we connect these to the Grid. As things stand, the Grid works on a first-come, first-served basis, with a pipeline of projects that’s continuing to grow at a rate of around 20GW a month.
‘The problem is that viable projects often find themselves stuck behind a horde of zombie projects that have little chance of success. A consultation starts next month to facilitate “ready” and “needed” projects, a positive step for sure, but we really need to see how this works in action. There is still the risk that developers will lose significant amounts of capital on large upfront costs getting projects ready, only then to find they are deemed “not needed”. If any of the new projects get stuck amid this stalled pipeline, then the effect of the extra investment could be significantly diminished.
‘It’s beyond the gift of the Chancellor in the Budget, but we need to ensure that the extra investment pledged today is matched by the promised reform of the planning system and the proposals to prioritise projects ready to start generating power. Otherwise, there is risk that we actually just invest in building a bigger logjam.’
In related news:
The future of council housing ‘hangs in the balance’ – report
