Spring Budget 2023: Impact on the UK Housing Market

Many commentators on this year’s spring budget may have been hoping for Stamp Duty cuts to encourage more people to buy homes either for themselves, or as a rental investment. Perhaps the private rental sector was hoping for measures to stop landlords quitting, or to increase the supply of rental homes. 

Whilst there was little to do with the property market in this budget, some of the policies announced will have an impact on housing.

Energy Bills

The Energy Price Guarantee, which caps bills at an average of £2,500 until March, has been extended until July. 

The forecast from the Office of Budget Responsibility, made after the Budget, predicts inflation will fall from 10.1% in January 2023, to 2.9% by the end of the year. 

All of this should leave more money in the pockets of buyers, sellers and renters – which could encourage them to start saving again, or put that home move back on the cards.Families that have felt the pinch financially may start to consider their home ownership goals again.

Getting back into work 

The main focus was on policies that will encourage retirees and parents back to work.

The rising cost of childcare has long been considered a barrier to parents returning to work. Working parents are entitled to 30 hours a week of funded childcare in England for 3 to 4-year-olds. With huge childcare costs and potentially inflexible work environments a huge number of parents find themselves excluded from working until their children reach school age.

But this funded childcare will now be extended in a £5bn package, with 15 free hours a week for two-year-olds in April 2024, and then for those aged over nine months in September 2024, moving on to 30 hours for all from September 2025. 

The Chancellor also announced a £63m “Returnerships” programme for over-50s who might want or need to return to employment in a different sector. 

In an effort to retain more highly-paid people in the NHS and elsewhere, the tax-free limit on pension savings has been abolished, and the annual allowance – how much you can save tax-free – has been raised from £40,000 to £60,000.  

It’s hoped this will boost growth in the economy, which would put more into the housing market and give people the finance and confidence to think about buying & selling.  

What Else was announced?

Other measures detailed included: 

• The defence budget to be increased by £11bn over the next five years 
• £200m for councils to fix potholes 
• £900 investment in the artificial intelligence sector 
• A 12-month extension to the freeze on fuel duty 
• The abolition of the Work Capability Assessment, allowing disabled people to take a job without fear of losing their benefits 
• From July, a commitment to charge pre-payment meter energy customers the same as direct debit customers 

Almost one billion pounds is being poured into enterprise zones across England. The aim is to create new jobs, which could lead to lots of people moving home as they transfer to these hopeful “goldmine” areas. It may well send up house prices and landlords’ rental prices too, attracting investors. Developers would follow, creating more new-build homes to rent and buy.  

There are 12 new zones in 8 areas run by Combined Mayoral Authorities. These are: East Midlands; North East England; Greater Manchester; Liverpool City Region; South Yorkshire; Tees Valley; West Midlands; and West Yorkshire. Each will be getting £80 million spread across five years – that's £16 million per year – to support businesses and training, and create infrastructure. 

Finally, with inflation forecast to drop to 2.9% by the end of the year, and the news that the UK has avoided recession, there may be an unexpected sense of confidence among potential movers. 

So, while we are not any clearer on the government’s specific plans for the housing market, it is clear that they are focusing on boosting the economy and making people feel more financially stable. The hope is that this financial stability will lead to property prices becoming affordable and consistent, and people across the country feeling confident enough to move to a new home if that's what they want.