What the Autumn Statement means for the property market.
The Chancellor delivered his first and final Autumn Statement yesterday, having pledged to abolish the event and consolidate changes into a once-yearly Budget.
We suspected that this Government – under Theresa May’s leadership – would give themselves scope to borrow, by abandoning Osborne’s pledge to balance the books by the end of this parliament. This is exactly what they did, with the Chancellor proposing a new, £23 billion national productivity investment fund, which will prioritise high value investment in infrastructure and innovation, in order to increase productivity in the UK.
The independent forecasts by the Office for Budget Responsibility show a clear negative economic impact over the next few years, resulting from the UK’s decision to leave the EU. This investment is one of many attempts we will see by HM Treasury, to try to mitigate that.
We also had the confirmation of the housing infrastructure funds to help provide 100,000 new homes in areas with the greatest demand. It also provided a funding committed for the delivery of 40,000 extra affordable homes, facilitated through relaxing restrictions on grant funding. This will help house builders to deliver a mix of both affordable rent, and low cost ownership homes.
Alongside the tranche of housing announcements, Hammond also indicated that the Government would be funding a large regional pilot of the Right to Buy for housing association tenants, which will extend to over 3,000 tenants.
Also included in our predictions, was that the May Government would carry through on core manifesto commitments relating to the income tax personal allowance, and also the higher rate tax threshold, both of which feed into the framing of this statement: helping the Just About Managings (JAMs).
The Chancellor therefore confirmed the personal allowance would continue to increase as expected to £11,500 next year, and that the higher rate threshold will increase to £45,000 next year too. By the end of the parliament, this will keep them on track to hit their target of £12,500 and £50,000 respectively. And in another move that would bolster the pay of lower earners, the Government will raise the national minimum wage to £7.50 p/hour, next year.
In previous blogs, we’ve written about the potential opportunities that devolution could bring for house building in all areas of the country, and this Autumn Statement built on that to a certain degree. The Government has committed £1.8bn in funding for Local Enterprise Partnerships (LEPs) across England, earmarked for infrastructure including to help “unlock house building”. £556 million of this is going to the North of England alone.
Separately, £3.15 billion will go to the Greater London Authority as part of their affordable housing settlement, in order to deliver 90,000 new affordable homes by 2020-21.