What does the budget mean for mortgages?
Despite the budget not mentioning anything specific to help the property market, the Chancellor’s childcare reform could have a positive knock-on effect for mortgage affordability.
From April 2024, working parents will have access to 15 hours of free childcare for children aged two, extending to children from nine months in September 2024 and then, from September 2025, increasing to 30 hours for those aged between nine months and three years. Childcare fees have a big impact on how much a family can borrow, and so the changes could help make more families ‘mortgageable’ in the future.^^
In addition, the fact that the budget revealed that the UK is no longer expected to enter a recession could provide more confidence to buyers and an acceptance that higher mortgage rates are the new norm.
How will these changes affect landlords?
The latest rental index data from February 2023 showed continued regional and annual growth, currently lying at 9.9% annual increase for new tenancies^^^, offering a positive start to 2023. Additionally, individuals will benefit from the Government's decision of keeping the fuel duty freeze in place for a further 12 months and extending the energy price guarantee until June 2023.
Announcements were made surrounding green energy initiatives within the energy sector; however, there has been no update on the upcoming potential change in EPC regulations and offering the private rented sector further support.
In Scotland, the 0% rent cap will be lifted from 1st April, meaning that landlords can send a notice to their tenants and raise the rent by up to 3%.
What are the ‘investment zones’ that were announced?
Across the UK, Hunt announced 12 new investment zones – eight in England and four across Scotland, Wales, and Northern Ireland†. Successful areas will be supported with tax breaks and other benefits to revitalise these zones, which may prove to be important property investment areas for anyone looking to buy or build their portfolio.
The Spring Budget was focussed on stimulating the economy and jobs. Although the budget didn’t have any direct effects on the property and rental market, there are tax factors that will affect certain property businesses. Larger property investors will have to pay a higher rate of tax if they are set to achieve profits above the £250,000 threshold from April onwards.
If you’re interested in understanding how you can optimise your investments, it’s always worth speaking to a property expert.