Autumn Budget- The Key Points & What they mean for you

4th December 2023 Posted in: Housing Market, Interest Rates, Mortgages, News

On 22^nd November, Chancellor Jeremy Hunt announced a whopping 110 measures in his Autumn Budget, focussed on the growth of the UK economy. What does all this mean for you, particularly if you are hoping to apply for a mortgage?

There were a number of measures announced which could affect your take home pay, and potentially make it easier to save. However, it remains to be seen if people are better off on average once inflation is taken into account. Here are the main points at a glance:

• National Insurance – The main rate for employees will be cut from 12% to 10% from January 6^th 2024, on earnings between £12,571 and £50,271.
• Benefits- Will rise by 6.7% next year in line with inflation, but rules on qualification will be tightened.
• National Living Wage – Will rise to £11.44 per hour from 1^st April 2024. This will also now include 21- and 22-year-olds. 18–20-year-olds and apprentices will also see a pay increase. Good news for employees, but of course, employers will have to find the funds to cover these increases!
• Pensions – State Pension will increase by 8.5% next year in line with average earnings. Pension pot reforms and the maintained triple-lock were also confirmed.
• Self-Employed – Class 2 National Insurance payments have been abolished. Class 4 payments will be cut by 1% from April 2024.
• Businesses – Business Rate Relief has been extended. The small business multiplier has been frozen for another year, and the 75% discount on business rates up to £110,000 extended for retail, hospitality, and leisure businesses. The Business Tax Break has also been made permanent.

The current housing shortage is also a big problem. The below measures were announced in the latest budget to help tackle this, but given the estimate of 340,000 new homes being required on average each year, we had hoped for a bit more from the Chancellor’s speech.

• Local Housing Allowance will increase, having been frozen back in 2020.
• Reform to speed up planning applications.
• £110 million to be invested over the next 2 years to deliver high quality nutrient mitigation schemes, unlocking 40,000 homes.
• £32 million to bust planning backlog to develop housing in Cambridgeshire, London and Leeds.
• £450 million to the Local Authority Housing Fund to deliver 2400 homes.
• Consultation on a new Permitted Development Right to allow any house to be converted into 2 flats, providing the exterior is not altered.
• Investment in technology to improve the home buying and selling process.

Unfortunately, the Chancellor did not announce any new schemes (or reintroduce previous schemes) to assist first-time-buyers, mortgage holders or landlords. This is despite industry wide calls to do so, and a plea from Nationwide Building Society for an independent review into the FTB market. He has agreed to extend the Mortgage Guarantee Scheme to June 2025 to help those with smaller deposits buy a home. However, this scheme has not been particularly successful so far, largely due to the restrictions in place.

The good news is that we have started to see some stability return to the market, and lenders have been reducing rates in recent weeks. We expect base rate to hold steady for most of 2024, so don’t expect dramatic rate reductions. There are still options available which may help with affordability, or help you to get onto the property ladder!

Examples of the options available include shared-ownership, high loan-to-value deals (and some 100% deals through the likes of Skipton Building Society), and joint borrower sole proprietor mortgages, where additional applicants e.g., a parent can be added to the mortgage to help with affordability, without being added to the property deeds. We also have access to lenders who will accept complex or multiple income sources, more than 2 applicants on the mortgage, and multiple deposits or deposits from non-family members. Some of these options allow the donor to “protect” their deposit. It’s certainly worth a chat to see if we can find you an affordable solution.

If you would like to discuss options for purchasing your first home, moving or refinancing, please contact us on 01702 538800 or email enquiries@ingard.co.uk.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.