"With no budget for centrally funded and large-scale investment into a new generation of social housing, the Chancellor will need to explore options to instead unlock private investment into large-scale projects"
- Yann Murciano - Blend
Next week’s Autumn Budget will be Ms. Reeves’ first major test as she faces a challenging balancing act in an attempt to deliver economic stability and kickstart sustainable growth. The property market is keeping a close eye and hoping it won’t undermine its recovery.
Rachel Reeves is preparing the first big outing for HM Treasury’s red box under her leadership, limbering up to make a suite of tax and fiscal policy announcements next week. Her speech on 30th October, in the wake of Halloween, has been tipped as a “painful” Budget, which tends to mean hefty tax rises are looming to try and plug an alleged £22bn black hole in the books.
It will be Ms. Reeves’ first major test as she faces a challenging balancing act in an attempt to deliver economic stability and kickstart growth. But on the housing front, the big worry is that her first budget could put a damper on recent good vibes in the mortgage market. So, my team and I will be keeping a close eye on the Budget, especially because the past four years have been challenging for the UK property market and we look forward to a shakeup in the market.
Getting Britain building
Ms Reeves has been very vocal about the urgency to increase the supply of affordable housing, saying that she plans to deliver 1.5 million new homes over the course of the next Parliament. However, both developers and investors need clarity on the Chancellor’s long-term strategy.
Whilst steps taken to ease the planning process are welcomed, these steps alone are unlikely to deliver the level of housing market activity Labour hopes to see. Further targeted measures are needed to unlock new investment into Britain’s housing supply, deliver new modern and appropriate working spaces and revitalise town centres.
However, with no budget for centrally funded and large-scale investment into a new generation of social housing, the Chancellor will need to explore options to instead unlock private investment into large-scale projects.
Regulated non-bank lenders are a viable option of channelling much-needed private funding into the UK’s housing market and helping build the much-needed homes the country needs. It is no secret that real estate private credit has seen its popularity rise in the past few years.
As elevated interest rates and tighter lending standards have made capital more difficult to obtain from traditional debt markets, private credit has created solutions for borrowers and opportunities for investors. It might now create an opportunity for Labour to help build houses.
Targeted tax incentives to unlock new build housing supply and revitalise high streets could also be an effective option. For example, the use of ‘local’ and smaller-scale ‘enterprise zones, offering tax incentives would be a powerful tool to revitalise local communities and projects most in need of support.
Tax incentives through inheritance tax or stamp duty concessions to encourage downsizers will also help stimulate a healthy flow through the property market. For example, a freeze of SDLT for downsizers would encourage over-65s to move on and boost the number of family homes being put up for sale.
I also hope that the Autumn Budget will help alleviate the chronic shortage of rental properties, particularly in larger metropolitan areas such as London, Manchester, Birmingham or Bristol. Though likely to prove unpopular, this could be done by reducing the tax burden on landlords.
I would like the government to consider reintroducing mortgage interest relief and other tax breaks for landlords, as this would encourage more buy-to-let investors and smaller landlords to acquire property to rent again which will help meet the ongoing demand from tenants.
