By Legal Futures Associate Thames Water Property Searches
Rishi Sunak, Chancellor of the Exchequer, delivered his Spring Statement to Parliament last month (March) in what has been described as a ‘mini-budget’. While there were few measures directly related to the property market, he did offer some concessions that should benefit many homeowners and renters. These included:
- tax cuts for green home improvements
- reduced fuel duty
- the Household Support Fund for local councils doubled to £1 billion
- the National Insurance (NI) threshold raised by £3,000 to £12,750
- basic rate of income tax cut from 20 per cent to 19 per cent by 2024
However, with inflation and the cost-of-living soaring, as well as higher interest rates, some have suggested he didn’t go far enough. Figures from the Office for Budget Responsibility released alongside Sunak’s announcement showed there would be a 2.2 per cent fall in real disposable incomes over the next year, and inflation could reach as high as 8.7 per cent by the end of the year.
Iain McKenzie, CEO of The Guild of Property Professionals, said: ‘The financial challenges that people face will always trickle down to homeowners, those looking to get on the property ladder and those seeking affordable properties to rent.’
He continued: ‘While energy price rises will increase the cost of powering our homes, the measures taken to cut VAT on environmentally friendly power sources and energy-saving insulation will give homeowners some relief going forward. Regardless of these initiatives, average annual inflation of 7.4% will hit people hard and reduce the affordability of mortgage and rent payments.’
Despite the troubled economic climate, it’s heartening to see that the housing market has shown remarkable resilience so far this year. High demand from buyers has remained steady, driven in part by people continuing to reassess their lifestyles post-pandemic. Prices have continued to increase, helped by a shortage of housing stock. According to Zoopla, the stock of UK homes available to buy is 42 per cent below the UK’s five-year average. And last month (March) Rightmove confirmed the average price of a UK home reached a new record high of over £350,000.
However, some analysts predict the pressure on personal finances, combined with the increased cost of borrowing, could slow house price growth and demand. First time buyers in particular are likely to be hardest hit by the cost-of-living crisis. Zoopla forecast house prices will end the year just three per cent higher than they started, significantly down on the growth of 7.4 per cent recorded in 2021.
While the outlook for the property market may be uncertain, we would like to reassure customers that Thames Water Property Searches commitment to customer service remains the same.