In his latest blog, our Chief Executive, Rob Clifford, sets out what we might see in the upcoming 2023 Spring Budget.
The 15th of March is a pivotal day for the UK economy as a whole, let alone our specific part of it. That’s because Chancellor, Jeremy Hunt, will be at the Dispatch Box delivering his 2023 Budget, and it’s fair to say it will be under close scrutiny because of its importance.
It’s the norm these days that most of the policies ‘leak’ before the Budget itself only leaving one or two ‘rabbits from hats’ to be revealed on the day.
The rumours around what the Budget may contain have already begun with suggestions Hunt will extend the energy price guarantee for a further three months, freeze fuel duty and increase the defence budget.
In our housing and mortgage markets, there is less to go on, although some have suggested further stamp duty changes could be on the agenda, perhaps further increases for both ex-pat buyers and second-home owners, which of course would cover landlord borrowers.
This is interesting in itself, as there is said to be some disquiet in Government circles around the private rental sector, the mismatch between tenant demand and property supply, and the impact this is having on rents.
Some have even suggested the Government might row back on some of the measures that have hit landlord profitability over the last decade and have meant amateur landlords are more likely to sell up than stay invested.
In that sense, it remains up in the air, but the facts for the wider mortgage market appear to be pretty unexciting in terms of reduced transaction numbers to a large extent due to the huge increases in rates we saw post-‘Mini Budget’ last year. Indeed, you might argue that we haven’t truly seen the full impact yet as many completions take many months to make their way through the pipe.
The big question here, is what the Chancellor might feel about this, and whether he will do anything at all, this time. Inflation is still stubbornly high, and the Bank of England might sadly continue to increase Bank Base Rate in order to try and get anywhere near its 2% target this year.
We are undoubtedly in a very different environment for interest rates, and the levers Hunt has to stimulate housing market activity are limited. Further changes to standard stamp duty appear unlikely – after all, we have an ongoing concession right now.
Perhaps instead he will focus further on how to increase the supply available to would-be owners. The major housebuilders met him a few weeks ago, and it’s a cast-iron certainty they would have been discussing the end of Help to Buy and what this might mean for their ability to build the number of new homes required to meet supply.
However, will Hunt feel the need to replace a scheme with an almost identical one when it has just ended? It seems very doubtful to me, however, earlier this month Taylor Wimpey said it would build a third fewer homes this year than last, and lest we forget, as far as I’m aware the Government still has a target of building 300,000 new homes per year by the mid-2020s. Although that may well have been jettisoned.
One further point to acknowledge here, and that is the Deposit Unlock scheme – the one that appears to have the most traction as a potential replacement for Help to Buy, albeit still only has three major lenders involved.
Earlier this month, it was announced that Deposit Unlock has now signed up 50 house builders to take part in it, including some of the very biggest such as Taylor Wimpey, Persimmon, and Crest Nicholson.
It may well be that with these potential alternatives available – and without the need for significant use of taxpayer money – the Government might use its significant influence on more lenders to become involved in this scheme, rather than resurrecting Help to Buy under a new name. Again, that would be odd given it has allowed it to end.
Overall, Hunt may prefer to focus money and resource on those that need it most. There has been a lot of lobbying to provide further support for both mortgage prisoners and those currently struggling with their mortgage payments – access to advice for these borrowers is likely to be crucial in terms of finding cheaper products to move to and finding temporary solutions for those who are having difficulty.
What we do know is, whatever Hunt might announce, mortgage advisers are going to be right on the front line in terms of reacting to it and explaining what it means for existing and potential clients. But my assumption is that we all be a little underwhelmed by a budget which will contain no excitement.
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