Budget 2023 update for mortgages and housing
Many experts have criticised the government and the Chancellor, Jeremy Hunt for missing an opportunity to address several issues. This includes issues with housing, interest rates, property and business investment and first time buyers.
The budget was focused mainly on the cost of living crisis with rocketing energy prices and energy bills. This involved extending the current level of support in the Energy Price Guarantee, which had been set to end in April 2023.
There was also a key focus on the need to increase the workforce in the UK, with the new childcare incentives. There was almost no mention of the rising interest rates and the shortfalls on the housebuilding targets.
A number of property and mortgage experts have spoken out following yesterday’s budget to air their frustrations.
First time buyers
The current economy is causing significant problems for those buying their first home in an extremely challenging housing market. There was nothing offered to support this issue. Many experts were bitterly disappointed by the lack of any acknowledgement of this problem, nor were any solutions or support offered.
While it was unrealistic to expect any respite in the Stamp Duty payments, it was an opportunity to offer a reform to the current model. The current system contributes around £14billion to the Treasury and so was clearly too much to jeopardise.
Housing and property development
There was no mention of the current shortfalls in the projected figures for development of housing in the UK, even though the numbers are staggering. Housing and property development are a significant contributor to the economy which is also an opportunity that has been missed in the opinions of experts.
Childcare costs and support scheme
On a slightly more positive note, the was the introduction of a childcare support scheme for UK residents including young and new parents. This scheme is an opportunity to re-invigorate the mortgage and property markets. The government has approved childcare reforms that mean:
- Starting April 2024, working parents of two year olds will qualify for 15 FREE hours of childcare per week
- Starting September 2024, working parents of children over 9 months will also qualify for 15 FREE hours of childcare per week
- As of September 2025, it is planned that all working parents of children under 5 will qualify for 30 hours FREE childcare
- Parents on Universal Credit that are returning to working or increasing their hours will be able to claim up to 50% more per child. This is equal to £951 a month for one child, £1,630 a month for two children.
Pension limits scrapped
While this is generally only to apply to the extremely wealthy, scrapping the pension limits is likely to incentivise some borrowers away from early retirement. The Lifetime Pension Allowance has been scrapped completely and the yearly limit for adding to a pension has increased from £40,000 to £60,000.
This increase in pension savings could also spark more interest from older property owners to stay active in the property and mortgage markets.