In the lead-up to his first Autumn Budget as Chancellor of the Exchequer, John Healey vowed to offer breathing space for today, fresh hope for the future, and a Budget that makes Britain more resilient.
Expectedly big claims with Labour looking to capitalise on the latest ‘Burnham bounce’ in the polls, but did the contents of his little red box deliver for the housing market?
A package of small changes rather than sweeping initiatives meant any potential fireworks and headline tax changes quickly fizzled out, giving way to plenty of fine print and detail to be confirmed.
That said, there are still a few areas impacting the housing market that it is worth paying attention to.
Landlords face further tax pressures
The life of a landlord has been challenged in recent years with many changes to tax and legislation.
The full impact on the changes in the Renters Reform Bill have not yet played out, but there is now property and savings income tax rates will increase by 2 percentage points from April 2027, taking the basic rate to 24%, the higher rate to 44% and the additional rate to 49%. This may well continue to pile pressure onto rents driving up the cost of renting.
Good news for first-time buyers?
For first time buyers there were a couple of areas of good news in the budget:
- A new First Time Buyer ISA will replace the Lifetime ISA for new savers from April 2029, offering a 25% Government bonus on the final account balance, up to a maximum bonus of £20,000, towards a first home worth up to £450,000.
- The new ‘Your First Home Scheme’ will support first-time buyers purchasing a new-build property with a deposit as low as 2.5%, backed by a 20% Government equity loan that will be interest-free for five years. Income and property price restrictions will apply, with applications expected to open from February 2027. Its not a like for like Help to Buy replacement but details will continue to emerge.
Growth, tax, and the housing market
I tend to agree with Adam Waller, Cooper Parry’s National Head of Tax who said: “The Chancellor has tried to walk a pretty difficult tightrope here: put some immediate breathing space back into households and businesses without reaching for broad-based increases in the main taxes”.
There is some good news. No Capital Gains Tax increase, targeted help for high streets, support with business energy costs all point towards a government keen to tell a more pro-growth story.
But this is not a big tax giveaway and Landlords and those with significant savings income will pay more. Banks and parts of the gambling sector face higher taxes, and employers are being asked to absorb another increase in wage and fuel costs.
While there will be some impacts on the housing market from this budget, it is likely to take time for this to play out. In the meantime, we are likely to see a continued period of higher interest rates and the growing pressure will push up inflation impacting household incomes both of which point to a continued muted market for this year and probably most of 2027.
Ultimately, the Budget offers some positives, but a meaningful housing market recovery still looks some way off.