AUTUMN STATEMENT 2023: POSITIVE REFORMS SIGNAL BRIGHT FUTURE FOR PROPERTY MARKET
Friday November 24, 2023
In a welcomed move for the housing market, the Autumn Statement 2023 delivered promising news, focusing on key measures to boost real estate across the country. The announcement includes an extension of the 95% Mortgage Guarantee Scheme until June 2025, demonstrating the government’s commitment to helping prospective buyers with smaller deposits realize their dream of homeownership.
Key Highlights:
Mortgage Guarantee Scheme Extended: The widely-utilized Mortgage Guarantee Scheme, initially introduced in 2021 to facilitate 95% loan-to-value mortgages for buyers with a 5% deposit, will now run until June 2025. This extension aims to continue supporting first-time buyers struggling to secure both the income and deposit required for their first property.
£110 Million Investment in New Home Developments: The Chancellor revealed a significant financial injection, with £110 million earmarked for new home developments in the coming year. This substantial investment is expected to result in the construction of 40,000 new properties, addressing the ongoing demand for housing and providing a positive impetus for the real estate market.
Local Housing Allowance Unfrozen: The freeze on Local Housing Allowance Funds has been lifted, offering support to 1.6 million households. This move provides an average of £800 in aid for rental costs, offering relief to those on the lowest incomes.
Expert Insights: Richard Donnell, Executive Director at Zoopla, emphasizes the importance of supporting first-time buyers, stating, ‘Extending the mortgage guarantee will help some buyers struggling to borrow for their first property.’ While the scheme has assisted 37,800 households in the last two years, there is recognition that improvements in affordability and appeal are essential for its continued success.
In the broader economic context, the government is taking steps to enhance overall affordability and housing supply. The increase in the National Living Wage, coupled with a cut in National Insurance, aims to bolster household incomes, providing relief in the face of the ongoing cost-of-living crisis.
Looking Ahead: With inflation projected to hit the 2% target in 2025, there is optimism that mortgage rates could fall faster than expected in 2024. This, combined with the government’s commitment to reducing borrowing costs for all buyer groups, sets the stage for a potential rise in house sales.
In addition to the mortgage scheme extension, the Chancellor’s pledge to invest £110 million in new home developments, allocate £32 million to address planning backlogs, and consult on new housing initiatives underscores a comprehensive approach to boost housing supply.
The Local Housing Allowance rate increase for renters, coupled with the positive trajectory of mortgage rates, contributes to a more optimistic outlook for the real estate market. As the government takes measures to support affordability, housing supply, and income levels, the Autumn Statement 2023 signals positive reforms that may shape a bright future for the UK real estate sector.”