What impact will the March 2023 Budget have on the property market? 16 Mar 2023
Despite there being some key issues in the property market at the moment, there was no direct support for the housing market at all which we were disappointed with.
However, that doesn’t mean there wasn’t some ‘good news’ that will help the property market from an economic perspective. This, in turn will help, particularly in some areas of the country, put more roofs over people’s heads.
There were also some big announcements that could help investors and landlords to decide where to invest in the future.
5 things that will help housing affordability in the 2023 March budget
1. The biggest help over the coming months for the majority of households will be the extension of the energy subsidy to the end of June 2023. This will add an additional £160 to people’s pockets – albeit it’s important to remember everyone is having to pay higher bills, so are still worse off.
In addition, higher prices for energy because of pre-payment meters will be reduced and the aim is to have similar rates to those on direct debits.
2. For those in need during the cost-of-living crisis, £100 million of increased support is being given to charities so that they can deliver to those who the Government may not be able to reach easily, and this in turn may help them afford the roof over their head.
3. Duties frozen to help everyday spending, such as the cut of 5p in fuel duty are to remain for another year. And for those who like a tipple, some alcohol taxes in pubs will be 11p lower than in the supermarkets.
The Chancellor explained that these cost-cutting measures will help reduce inflation by 0.75% and it’s true that the double digit inflation rises we have seen are extremely damaging to everyone’s pockets, be it buyers looking for an affordable home or tenants.
More importantly, the Chancellor believes that inflation will drop dramatically this year – to 2.9% by December. However, this doesn’t mean the cost-of-living crisis will be over because of course, prices have risen by 10% or more. Now the prediction is that the growth in general costs will be lower at just under 3%.
4. Contrary to the sentiment following the disastrous September 2022 Budget, the UK economy is now not expected to go into recession this year. This doesn’t mean the economy won’t shrink, as the forecast is still for a decline of 0.2%, but growth of around 2% is expected over the next three years.
This in turn impacts on the forecast for unemployment: the expectation is that unemployment will not rise as previously predicted: it will remain low at 4.4% and approximately 170,000 fewer people will lose their jobs. This will prevent many people, whether homeowners or tenants, from losing their homes.
5. Helping people into work was a key aim of this Budget and the additional help for those who are disabled or long term sick, coupled with a substantial increase in childcare support and even apprenticeships equivalents for those over 50 (‘returnerships’) is all good news if it improves the finances of those who would otherwise be struggling to live on benefits alone or want to work and can’t due to childcare costs.
With a reduction in inflation, improved economic forecasts, and more people working to fill the 1m vacancies, there are some strong initiatives which will help to boost people’s ability to buy and rent properties.
Three investments worth property investors being aware of
The really big announcements that could help investors and landlords to decide where to invest in the future are on three fronts:-
1. The announcement that there will be 12 new investment zones, expected to deliver successes similar to Canary Wharf and Liverpool Docks. These are likely to be in:-
West and East Midlands
South and West Yorkshire
and one each for Scotland, Wales and N. Ireland.
Imagine investing in the likes of Canary Wharf before the regeneration started! But do bear in mind that these are just proposals and any investment is likely to take several decades to deliver. But, if you are looking at where to invest next, following what happens next in these areas could prove very worthwhile.
2. Huge investment in nuclear power: to deliver one quarter of our power supply by 2050 and to encourage further investment, the industry will be reclassed as ‘sustainable’. This will impact on areas around Hinkley Point C in Somerset and negotiations are ongoing for a Sizewell C project in Suffolk. These initiatives offer two types of investment: new homes in relation to an increase in jobs and also properties to rent for those working on delivering these projects.
3. Jeremy Hunt is also planning to make available a further £600 million which will provide 16 regeneration and 20 levelling up projects in England, including Tipton town centre, Redcar, Bassetlaw and Mansfield.
So although there was no good news for anyone investing in property from a financial or taxation perspective, additional infrastructure and regeneration investment may offer some future opportunities for some above average property returns.
Whether you’re looking to buy, sell, let or rent in the current market, we’re here to advise. Simply get in touch with your local branch and we’d be happy to help.