This week, the Chancellor of the Exchequer, Jeremy Hunt, announced his 2023 Autumn statement. His headline changes involved national insurance cuts, benefits boosted, and a focus on innovation – but what does this mean for the property sector?

His measures are said to increase business investment by £20 billion a year, until 2033.

But with the property sector going through a particularly turbulent time, and a general election looming, the bar has certainly been set high for the government’s plans going forward.

Planning

In his statement, Hunt promised to speed up the planning process and unlock the construction of tens of thousands of homes. To do this, the government is investing £32 million into tackling backlogs in Cambridge, London, and Leeds, and £5 million to incentivise greater use of local development orders in England.

A recent survey by the Royal Town Planning Institute found that 90% of Local Authorities surveyed reported a backlog of planning cases[1], which in part is due to the time-consuming process. To combat this, the Chancellor is looking to introduce a new premium planning service, where local authorities can recover the full costs of business planning applications, providing they meet enforced deadlines.

Hunt said this would create “a prompt service or your money back – just as would be the case in the private sector”.

Construction

Last year’s mini budget led housebuilders to cut back on their targets and the industry is currently being hit hard by other factors, such as the end of the Help to Buy Scheme, the soaring prices of mortgages, and the ongoing cost of living crisis.

To boost the construction industry, Hunt introduced a number of measures including investing £110 million in nutrient-offsetting schemes to overcome barriers faced by local planning authorities affected by nutrient neutrality rules. It’s predicted that this will unlock 40,000 homes – something that will be welcomed by the construction industry.

Housing

For social housing landlords, there was good news that the Local Housing Allowance (LHA) will be unfrozen from 1 April 2024 and increased to the 30^th percentile of local market rents, considering the price increase of rent in the private rented sector.

This means landlords will be able to rent to those receiving LHA or other social housing solutions and follows campaigns by the private rented sector and charity organisations, who have long been arguing that the gap between housing benefits and real-world rents is so large that it is causing tenants to become homeless.

The Chancellor said: “Because rent can constitute half the living costs of private renters on the lowest incomes, I have listened to colleagues and many organisations, who say unfreezing the LHA was an urgent priority.

“I will therefore increase the LHA to the 30th percentile of local market rates – this will give 1.6 million households £800 of extra support next year.”

As well as this, Hunt announced an additional £3 billion in funding for housing associations under the Affordable Homes Guarantee Scheme (ASGS). The main aim of this scheme is to provide longer-term, lower-cost, fixed-rate debt to registered providers to enable them to deliver more affordable homes. This booster amount will help the scheme deliver 20,000 new homes and improve the conditions of thousands more.

Until June 2025, the government is also extending the Public Works Loan Board policy margin, which was announced at the Spring Budget in 2023, to support local authority investment in social housing. What’s more, an additional 2,400 homes will be delivered by allocating £450 million to a third round of the Local Authority Housing Fund.

For property investors, a new Permitted Development law will make it easier to convert houses into flats, allowing them to meet demands for rental accommodation. Under this, any house can be converted into two flats providing the exterior remains unaffected.

Also hidden within the plethora of announcements, was Hunt’s commitment to the 95% mortgage guarantee, extending it for a further 18 months. Originally due to end in 2023, the government is assisting first time buyers to get on the property ladder by extending the guarantee, allowing both new build and existing properties with a value of up to £600,000 to be purchased with a 5% deposit.

Infrastructure & Investment

Delivering high quality infrastructure is crucial for boosting economic growth and productivity across the UK. The statement included pledges to major infrastructure projects, promising to progress the National Infrastructure Commission’s (NIC) recommendations on planning, by delivering reforms to return the Nationally Significant Infrastructure Project regime to the two years and six months average consenting time.

The government is also delivering on levelling up and announced further measures to support growth and investment across the UK, including confirming the next set of investment zones in Greater Manchester, the West Midlands, and the East Midlands. Within the investment zones, there will be a significant focus on advanced manufacturing, set to help create thousands of jobs in each of the regions.

In the West Midlands, an investment of £70 million has been made from Bruntwood SciTech and Woodbourne Group for the Birmingham Knowledge Quarter. Other sites include the Coventry-Warwick Gigapark and the Wolverhampton Green Innovation Corridor.

Take-Home Pay

Also announced in the statement is that taxes are being cut for employees and the self-employed through several changes. Impacting the sector’s self-employed workers, which covers a variety of professions from builders to landlords, the government pledges to cut the main rate of Class 4 self-employed National Insurance contributions (NICs) from 9% to 8% from 6 April 2024 – benefiting approximately 2 million individuals.

Furthermore, the government will be abolishing Class 2 self-employed NICs. From 6 April 2024, no one will be required to pay this, and the government will reportedly set out next steps on Class 2 reforms next year.

A change that is bound to affect the sector by increasing the cost of employment for firms, is the uprating of the National Minimum and Living Wage. From 1 April 2024, the National Living Wage (NLW) will increase by 9.8% to £11.44 an hour for eligible workers across the UK aged 21 and over. Young people and apprentices on the National Minimum Wage (NMW) will also see a boost to their wages.

Industry reactions following the Autumn Budget have been mixed, with some expressing disappointment in its limited impact on the property sector, while others are showing appreciation for the measures announced.

As a Birmingham PR agency with many years of experience working with property and infrastructure clients, we understand the industry and appreciate how the Budget will affect decision makers, employers and employees in the industry.

If you’d like our help and advice, or would like to find out more about our offering, we’d love for you to get in touch.

 

[1]Almost 90% of Local Authorities surveyed struggling with backlog of planning enforcement cases