On Wednesday, November 22nd 2023, Chancellor Jeremey Hunt announced the Autumn Budget Statement. This statement takes a look at the government’s plans for spending and commitments for the country over the coming year.
In Jeremy Hunt’s autumn budget, he outlined the government’s plans for National Insurance, taxes, and changes to welfare. The most interesting announcement he made however was the planned increase to housing supply and the digitalisation of the buying and selling process.
In this blog post, we will be taking a closer look at how the autumn statement will affect the property market and what it could mean for you.
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- What is the 2023 UK Autumn Budget?
- What was the purpose of the Autumn Statement?
- Will the autumn budget affect house prices?
- Are house prices set to plummet?
- What are the council tax rises in the Autumn Statement?
- Will the cost of living go up due to the autumn budget 2023?
- How does the Autumn Statement affect me?
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What is the 2023 UK Autumn Budget?
The UK Autumn Budget is an annual statement that is presented in either October or November by the Chancellor of the Exchequer. Paired with the Spring Budget statement, this statement is used to outline the current government’s economic and fiscal policies for the year, on top of any changes they plan to make to public spending and taxation.
Topics that are often covered in the Autumn Budget include forecasts for economic growth, inflation, unemployment, as well as general information about the economy and proposed measures to tackle any economic challenges. The statement will also go into further detail about financial policies that may be coming into fruition that will impact individuals, businesses, and the economy in general.
What date is the Autumn Statement 2023?
The Autumn Statement took place on Wednesday 22nd November 2023 and was scheduled to start at 12:30.
What was the purpose of the Autumn Statement?
The purpose of the Autumn Statement is to inform the public of the government’s plans for the coming year, looking at planned cuts, funding, policies and more. Below we take a closer look at the purposes that it serves:
Economic and Fiscal Update
The statement is used as an opportunity to provide an update on the current state of the UK economy, looking at economic growth forecasts, employment figures, and inflation projects.
Much like the Spring budget, Jeremy Hunt Autumn Statement covers any new policies that are to be announced, as well as any changes to taxation, public spending and other financial measurements.
The statement also offers the government the option to adjust any policies they may have announced in the spring budget in response to economic changes that may have taken place.
As the autumn budget statement is to provide an update on economic indicators and fiscal plans, which helps to contribute to the transparency and accountability of the government’s financial decisions. It allows the public and policymakers to understand the government’s priorities and financial strategies.
What was announced in the uk autumn budget?
Mr Hunt announced a variety of changes in the autumn budget statement 2023, looking at rewarding work, energy, and enterprise with a real focus on halving inflation, growing the economy and taking steps to reduce the country’s debt.
As it currently stands, CPI inflation has been halved from over 11% to 4.6%, showing that the economy is recovering from the coronavirus pandemic.
A decrease in inflation to 2.8% has been predicted by The Office for Budget Responsibility (OBR) for the end of 2024. They also estimate a boost in business investment by £14 billion and 78,000 more people employed, with policies forecasted to increase the economy’s potential output by 0.3%.
What did the Chancellor have to say about housing?
In the Autumn budget 2023, Mr Hunt has announced:
Housing supply investment
- The government has highlighted their plan to support economic growth by building homes in strategic areas.
- They have also included an additional funding of £32 million that has been allocated for the purpose of housing and planning for housing.
- Mr Hunt also introduced measures such as new Permitted Development Rights, tackling planning backlogs, and support for specific areas such as Leeds and London.
- Furthermore, funding is to be provided for East West Rail and a rapid transit bus network in Thamesmead.
Social housing and affordable homes
- The government has furthermore committed to building affordable homes, as well as extending the Affordable Homes Guarantee Scheme by £3 billion.
- They have also introduced initiatives such as pilots for property tech products and digitising local council property data.
An increase in support for home movers
- The government has also reiterated its commitment to supporting home movers by taking steps to improve both the house-buying and selling process.
- The government has also promised to extend the Public Works Loan Board policy margin to support local authority investment in social housing.
An extension to the Mortgage Guarantee Scheme
- Mr Hunt has also announced an additional extension of 18 months to the Mortgage Guarantee Scheme which originally planned to close to new accounts on December 31st 2023.
What does this mean for other industries across the UK?
Alongside their initiatives and announcements for the property market, the autumn budget 2023 brought other changes for the country:
Financial incentives and funding
The government unveiled plans for financial incentives for investment zones and tax reliefs for Freeports to be extended from 5 to 10 years.
A new £150 million Investment Opportunity Fund will be established and £4.5 billion will be allocated to support strategic manufacturing. This will include aerospace, the green industry and life sciences.
The government has also pledged to invest £500 million over the next two years for the creation of innovation centres in order to cement the UK’s position as an AI powerhouse.
Reforms for pensions
Pension reforms are another area that the government has pledged changes for in the autumn budget. Under new policies, consultants will be initiated on reforms such as giving an individual a single pension pot for life and allowing pension savers to require a new employer to contribute to their existing pot.
Reducing electricity bills
The government have also unveiled new palms for reforms in the reduction of energy bills by offering up to £10,000 off electricity bills for those near new transmission infrastructure and plans to reduce in delays in clean energy businesses accessing the electricity grids.
Planning system reforms
Reforms to the planning system will streamline planning applications, allowing local authorities to recoup full costs for major business planning applications, contingent upon assured acceleration of timelines.
Projections indicate a growth of 0.6% in the UK economy for the present year and 0.7% for the following year. However, forecasts for 2024 and 2025 have undergone a substantial reduction.
Productive state focus
Jeremy Hunt underscores the importance of a more efficient state over a larger one, establishing a goal for the public sector to enhance productivity by a minimum of 0.5% annually.
Spending commitment for defence
The government has also committed to meeting the NATO target of spending 2% of GDP on defence.
Commitment to social spending
In the autumn budget, there was a restatement of the government’s commitments to NHS, adult social care, and school funding. The total departmental spending is projected to increase by £85 billion in real terms by 2028-29, in comparison to the levels observed in 2019-20.
Reduction of debt
By the end of the 5 year period, the OBR will forecast a decline in headline debt to 94%.
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Triple lock pension
The government pledges to uphold the pension triple lock, ensuring an 8.5% increase, while benefits will see a 6.7% boost tied to the September inflation rate.
Additionally, a Back to Work Plan is introduced to aid individuals in both securing and maintaining employment.
Tobacco and alcohol
Alcohol duty will be frozen until August 2024.
Tobacco duty will be increased.
Rent support and housing allowances
The government has also announced plans to increase the local housing allowance rate to the 30th percentile of local market rents and provide support to 1.6 million households.
Mr Hunt has also announced £50 million in funding will be used in the next two years in order to increase apprentices in engineering and other areas for key growth.
From January 2024, the main employee (Class 1) National Insurance rate will be cut from 12% to 10%. This change is estimated to benefit 27 million people across the UK.
Further changes to National Insurance have also been unveiled, with Class 4 self-employed NICs being reduced and Class 2 being abolished.
The national living wage will rise from £10.42 to £11.44 an hour from April 2024.
Tax breaks for businesses
The Autumn budget also brought plans to make full expensing for businesses permanent. This will allow them to be able to climb back 25p corporation rax for every £1 they invest in IT, equipment, and machinery.
How does the autumn budget affect house prices?
As the autumn budget effectively outlines the economic landscape of the UK, it can have an effect on housing, both negatively and positively. This is due to several factors such as interest rates, housing investment and policies, as well as the wider economy. Below we take a look some at some of the factors in the autumn budget that can affect house prices:
If the budget includes changes to monetary policy or signals from the central bank about potential interest rate adjustments, this can impact mortgage rates. Higher interest rates can lead to higher borrowing costs, potentially affecting housing affordability and demand.
Measures in the budget that stimulate economic growth can positively affect employment and income levels, which may contribute to increased demand for housing. On the other hand, austerity measures or economic slowdown signals might have the opposite effect.
The budget may include specific policies related to the housing market, such as incentives for first-time homebuyers, changes to property taxes, or initiatives to increase housing supply. These can influence the dynamics of supply and demand in the housing market.
By securing funding for infrastructure projects, certain areas may increase in desirability, thus increasing house prices.
Due to the nature of the autumn statement, any negative or positive housing news will have a knock-on effect on house prices.
Will the autumn budget affect house prices?
The autumn budget house prices do seem to have an effect, as shown by evidence from the OBR as well as economic indicators.
Projections from the OBR seem to indicate that there will be a forthcoming decline in house prices, with a predicted 4.7% drop in 2024. A potential low of £266,000 in the last quarter of 2024 is predicted for the average price of a home in the UK.
The foreseen decrease in house prices suggests that, by the fourth quarter of 2024, overall housing prices maybe 7.6% lower than their peak in the initial three months of 2022.
While the OBR anticipates a recovery in housing prices, this resurgence is not expected to reach the levels observed in 2022 until the year 2027. This prognosis points towards a prolonged recovery period with accompanying market challenges.
The OBR underscores the sensitivity of housing prices to fluctuations in interest rates and household income growth. Factors such as diminished new buyer inquiries and a sluggish market further reinforce the perception that the housing market is currently facing considerable strain.
Are house prices set to plummet?
House prices are expected to fall by 2% over 2024 according to data from Zoopla. They also predict that rising incomes may improve house affordability, which Jeremey Hunt autumn statement confirmed via an increase in minimum living wage.
Will the autumn budget affect stamp duty?
Chancellor Jeremey Hunt did not include any changes to stamp duty in the autumn budget 2023. So, as a result, stamp duty will remain the same. The lack of policies or changes to the current stamp duty rate has been met with disappointment by industry experts, who were hoping that a stamp duty holiday may have been announced.
What are the council tax rises in the Autumn Statement?
There has been no announcement of a council tax increase autumn statement, however, the BBC warns that council tax could increase as a result of the budget.
The leader of Telford and Wrekin Council has warned that “More and more of our residents need our services, but without adequate government funding, the reality is that many will end up paying more council tax and getting less.”
Will the cost of living go up due to the autumn budget 2023?
Exactly how much the autumn statement will affect the cost of living crisis will remain to be seen but with measures put in place to support the general public, such as the commitment to more social and affordable housing, the increase in minimum wage and the cuts of national insurance, it seems as though changes could be made for the better.
How does the Autumn Statement affect me?
The Jeremy Hunt autumn statement will affect every resident of the UK, whether they realise it. As the budget covers so many aspects of everyday life, it is bound to have a knock-on effect for everyone, regardless of where in the country they are.
Below are some of the ways that the Autumn Budget may affect you:
The new changes to income tax and the different thresholds will impact most people across the UK.
National Insurance Contributions
A cut in national insurance will mean that workers will have more disposable income. These changes will affect both employees and employers.
Welfare and Benefits
Reforms or adjustments to welfare programs and benefits can affect individuals who rely on government assistance. This includes changes to child benefits, housing benefits, and other social support systems.
As the autumn statement included pension reforms, many workers will find that they will be affected by these changes.
The new policies surrounding investment into housing supply, affordable housing, social housing and support for home movers will affect those looking to get their foot on the property ladder, and those who may be struggling with their housing.
Business and Employment
The introduction of a minimum wage rise is another aspect that will affect both employers and employees.
Energy and Environment
Measures related to sustainable energy and environmental policies might impact individuals through changes in energy costs or incentives for eco-friendly practices.
Healthcare is another aspect that affects the day to day life of people across the UK, and with the autumn budget including reaffirmations to the NHS, this will likely have a knock-on effect.
That covers everything you need to know about the autumn budget 2023. If you have any questions, queries, or insight into the matter, please feel free to get in touch!