Autumn Statement did not do enough for housing market

Included among yesterday’s measures was the announcement that reductions in stamp duty, introduced by the previous chancellor in September’s “mini” Budget, will only remain in place until the end of March 2025. 

The chancellor also announced changes to the annual exemption for capital gains tax, which will move from £12,300 to £6,000 from April 2023.

It will then drop to £3,000 from April 2024.

Many mortgage brokers and advisers have said they would have liked to see the stamp duty cut remain in place for longer, and although the reaction to the capital gains tax change was mixed, many said it will negatively impact the buy to let sector, and in turn renters. 

What the market really needs now is policy stability Brian Byrnes, Moneybox

The stamp duty reduction end date is far enough in the future that it should not lead to a spike in sale activity, Mark Harris, chief executive of mortgage brokerage SPF Private Clients said.

Instead, it should “give some support to the housing market and encourage transactions over the next couple of years”.

“With regard to capital gains tax, the changes could have been so much worse for landlords and second homeowners, with fears that the chancellor would increase the rate at which the tax is charged rather than tweaking thresholds,” Harris said.

In his view, the changes are unlikely to persuade landlords to sell up before the lower threshold is introduced in April and will have a relatively small impact when people come to sell.

However others were less optimistic. 

The National Residential Landlords Association said the changes to capital gains tax will “dissuade investment for years to come”.

Chief executive of the organisation, Ben Beadle said: “The government has yet again failed to recognise the potential for housing to drive growth and deliver for the economy.” 

The NRLA argues that the stamp duty level should be scrapped entirely. 

“The last thing renters need is an effective further tax hike on the private rented. All this will do is discourage investment in the new homes to rent the country desperately needs and drive up the cost of renting” Beadle said.

“The demand for private rented housing is massively outstripping supply. This will only worsen as growing mortgage rates make home ownership more difficult to afford,” he added.

Demand for private rented accommodation in the UK is up 142 per cent compared with Zoopla's five-year average, while supply of private properties available for rent has fallen by 46 per cent. 

Mortgage Advice Bureau’s head of lending, Brian Murphy warned that the buy-to-let market could become “hostile” for landlord’s as a result of yesterday’s Autumn Statement.

“Expectations are that house prices in general are likely to ease over the next 12 months and for the buy-to-let sector, which has been under pressure from a range of government interventions for several years, this may prove to be another reason to prompt some landlords to consider disposal of their property in order to maximise any capital gains before the new thresholds become effective,” Murphy said.

First time buyers

Experts also noted that yesterday’s statement offered no respite for first time buyers. 

James Turford, co-founder of mortgage firm Even said the higher tax burden that has resulted from the Autumn Statement will compound the rising cost of living and make it even more difficult for first time buyers to save for a deposit. 

Turford said it was notable that there were no proactive measures included to boost the supply of homes.

“It seems protecting the value of existing homeowners’ property has taken priority over increasing the number of homeowners in our country,” Turford said.

“The only hope is that the statement is so hawkish, bond rates will fall sufficiently to undo much of the damage the mini Budget caused, improving the affordability crunch currently faced by those trying to escape the rental market.”

Moneybox head of personal finance, Brian Byrnes agreed that first time buyers are in need of some stability in the mortgage market following the turmoil that was released by Truss and Kwarteng’s “mini” Budget. 

"First-time buyers have experienced significant volatility in recent months as mortgage rates have increased and the number of mortgage deals available on the market has simultaneously reduced,” Byrnes said. 

“What the market really needs now is policy stability and as such it is disappointing that a measure introduced as permanent only six weeks ago is actually going to be withdrawn in 2025. 

“There is also no clarity at this point as to whether the measure will be phased out or whether we will see another cliff-edge deadline as we saw in 2021.”

Byrnes warned that another abrupt finish to a stamp duty policy would create more stress on first-time buyers who would be left to rush to get their transactions completed ahead of the deadline.

jane.matthews@ft.com