An Autumn Statement for Growth
On 22 November, Jeremy Hunt outlined 110 growth measures which he said would boost business investment by £20bn a year, as part of the Autumn Statement. In an effort to get the economy “back on track” his package of measures are intended to cut business taxes, raise business investment and get more people into work, in what he declared, “An Autumn Statement for Growth.”
Kicking off his announcement with the latest economic projections from the Office for Budget Responsibility (OBR), inflation is predicted to reduce to 2.8% next year, before reaching the government’s 2% target in 2025. Expectations are that the economy will expand by 0.6% in 2023, by 0.7% in 2024 and 1.4% in 2025. The Chancellor said, “If we want those [growth] numbers to be higher, we need higher productivity,” adding that his growth measures would help close the productivity gap.
Housing was largely absent from the key fiscal event, but there are a couple of points to be aware of.
Mortgage guarantee scheme extended
This scheme, introduced in March 2021 with the aim of helping more buyers get on the property ladder, was due to end in December this year, but it will be extended by 18 months, until the end of June 2025.
The scheme aims to help borrowers with smaller deposits to take out a mortgage with a 5% deposit on a home worth up to £600,000. The government gives a partial guarantee to the mortgage lender of up to 15% if the borrower defaults on their repayments, giving lenders the confidence to offer higher loan-to-value mortgages.
The scheme is available to those buying a home they plan to live in using a repayment mortgage. It does not apply to buy-to-let investments, or to those purchasing a second home or holiday home. Only loans set at a maximum of 4.5 times income qualify for the scheme.
New permitted development rights
The Chancellor announced plans to scrap planning permission for property owners wanting to convert one house into two flats. It will only be allowed in cases where the appearance of the home on the outside does not change. This could be good news for property investors and helping to meet ongoing demand for rental accommodation.
Housing and planning investment
During the Statement, an additional £32m was pledged to unlock development of thousands of homes across the country, including funding to tackle planning backlogs in Local Planning Authorities (LPA).
Comment from the industry…
Rightmove’s property expert Tim Bannister commented, “The lack of housing announcements feels like a missed opportunity to help home movers and homeowners today, given the challenges this year with higher mortgage rates… We hope the government will consider other measures to help the market in the Spring Budget.”
Your home may be repossessed if you do not keep up repayments on your mortgage.