Spring Budget 2023: How Will This Impact Property?

This afternoon, incumbent Chancellor Jeremy Hunt announced his spring budget. The budget statement was laden with predictions, promises and policies for the future of the United Kingdom, and covered everything from corporation tax to artificial intelligence, childcare to potholes. But what parts of the spring budget will impact investors, developers, buyers and tenants, and how will the Chancellor’s statement shape the UK property market for the weeks, months and years to come?

Inflation Set To Fall

Chancellor Hunt stated this afternoon in his “back to work” budget that inflation is set to dip to 2.9 per cent by the end of the year. This is a significant dip in inflation, which hit a whopping 10.7 per cent in the final quarter of last year. This prediction regarding inflation comes as the Office For Budget Responsibility (OBR) stated that the UK will narrowly miss a technical recession, and will experience growth for every year of the forecast period from 2024 to 2027. This news will be welcomed by investors and home movers who will not be faced by property prices rising unsustainably, and should allow first time buyers to save more of their money towards a home deposit. Ultimately, the goal as set out in the “back to work budget” is that everyone will benefit from a stronger and more stable economy that Hunt aims to reach by the end of 2023.

Childcare Assistance

Families are now entitled to thirty hours of free childcare for one and two year olds as part of a £4 billion expansion in childcare funding. This funding will eventually cover all children from the age of nine months in households where both parents are working, and the aforementioned provision will only be eligible for 38 weeks of the year when school term are active. Additionally, ‘wrap around’ childcare is also being endorsed by the government, with Hunt stating that all schools should be able to offer additional care for children from 8am to 6pm by September 2026. This forms the core of the Chancellor’s ‘back to work’ spring budget which seeks to free Brits from the constraints that may be stopping them from entering the workforce or taking on more hours.

This will greatly benefit families across the UK by helping them to cut childcare costs significantly, thereby ideally leaving the average family with more disposable income and potential savings to spend on property related purchases. As such, we could see a boost to the property market as families look to move, starter homes become more readily available and larger, more established family homes increase in demand.

Energy Price Guarantee

Ahead of the budget, Chancellor Jeremy Hunt announced that the anticipated £500 hike in the average energy bill was to be scrapped in favour of extending the existing Energy Price Guarantee. As a result, the average yearly energy bill is anticipated to sit at £2,500 as opposed to £3,000, which will undoubtedly be received with a sigh of relief from the British public. This extension is expected to last an additional three months, and should save the average family an extra £160 in addition to the existing support measures for energy bills. This will undoubtedly help tenants and homeowners alike by helping to relieve the pressure of energy price hikes that have been so pervasive since 2022.

Growth For The West Midlands

The Chancellor has targeted twelve key regions surrounding acclaimed and established British universities as part of his extension of the existing ‘levelling up’ project. As well as making £100 million available for research and development in key areas such as the East and West Midlands, he has made the decision to reform the policies implemented by former Prime Minister Liz Truss which saw councils bid against one another for funding. Instead, Chancellor Hunt will make £200 million available for local regeneration projects across England in addition to 12 investment zones across the UK that will benefit from £80m in funding each over the next 5 years. This will encourage investment in these key areas, strengthening their local economies and encouraging investors and homeowners to look outside of London for their next purchase.

Corporation Tax Boost

Corporation tax is set to be raised from 19 per cent to 25 per cent for businesses that make over £250,000 worth of annual profit. Approximately 10 per cent of British businesses will have to pay this increased rate of tax, with 90 per cent of businesses remaining virtually unaffected. This will of course, however, impact property development companies that are set to achieve profits above the £250k threshold from April onwards – it’s worth noting that the Chancellor also announced tax breaks for machinery and technology which may be significant in lowering taxable profits.

Centrick’s Group Sales and Lettings Director, Andy Butts, commented:

The majority of Chancellor Hunt’s budget this afternoon was expected, and we welcome the news that measures to ease the impact of the cost of living crisis are being extended. It is also refreshing to see that barriers to work are being lifted, especially for parents struggling with childcare costs. Lastly, the predicted return to economic growth by the end of the year will certainly be welcomed by both residential buyers and property investors, with greater economic stability benefitting all aspects of the property market.

If you are looking for more information on how the Chancellor’s spring budget announcement may impact your planned property endeavours, or simply want to find out more about how to make the best property-related decisions in light of today’s budget, please do not hesitate to contact the Centrick team using the form below. Alternatively, for regular property news that ranges across build to rent, commercial, residential, land and more, bookmark our News and Insights page to stay in the loop.