Despite valid concerns about possible reductions to cash ISA limits and tax increases, the property market and landlords, in particular, got off scot-free in today’s Spring Statement.
Following the October budget and the shock rise in Stamp Duty on additional homes, we can all take a collective sigh of relief that no further taxes have been imposed on the sector.
However, these announcements will likely unsettle the market, pushing SWAP rates up, with mortgage rates to follow in response. Here, we look at the key takeaways and the controversial plans from Rachel Reeves’ Spring Statement.
Planning Reforms
The Planning Reforms announced in the Autumn Budget, which aims to deliver 300,000 new homes per year, mean that house building is at a 40-year high. Developments are on track to deliver 1.3 million new homes over the next 5 years, against the manifesto pledge of 1.5 million.
Today, Reeves confirmed that the OBR predict that these reforms will permanently increase GDP by 0.2% by 2029-30. In hard money terms, this is an additional £15.1 billion to the UK economy over 10 years.
The government will provide another £2 billion in funding for 18,000 social and affordable housing in 2026.
To help deliver these targets, a further £600 million has been allocated to training 60,000 more construction workers, providing skills and jobs for young people.
Increased housing availability should ease the disparity in supply and demand in the rental sector, whether existing renters can purchase homes or landlords can buy new investments. However, it’s unlikely this will have any negative impact on rental growth or property pricing.
Defence Spending
As predicted, Reeves has decided to increase defence spending to 2.5% of GDP, equating to an additional £2.2 billion. 10% of that budget intends to make the UK an “industrial superpower” by investing in developing new “novel technologies” with advanced manufacturing in Glasgow, Derby, and Newport. This will create further demand for highly skilled engineers and scientists and, by default, a need for housing in these areas.
This spending also includes plans to regenerate key defence bases like Portsmouth Naval Base and secure better homes for our military families in places like Plymouth and Aldershot.
Universal Credit Cuts
Following a week of controversial announcements around plans to reform the UK benefits, Reeves confirmed a host of measures in today’s statement, including:
- Above inflation increases to the standard allowance for new and existing claimants. This means the rate for single people over 25 will increase from £92 per week in 2025/26 to £106 by 2029/30.
- Changes to allowances for those who can’t work due to sickness or disability. New claimants will receive less per week (£50) unless they have the most severe or life-long conditions with no prospect of being able to work. Existing claimants will have their health element frozen at £97 a week until 2029/30
- Changes to the eligibility criteria for Personal Independence Payments (PIP)
With these cuts and money for a job support programme, the welfare department will save an estimated £3.4 billion. However, this could have significant financial ramifications for tenants on these credits. As always, our advice would be to communicate openly with any tenants you are concerned will struggle due to these reforms.
Predictions for Inflation Following the Spring Statement
Just this morning, we learned that inflation had eased to 2.8% year-on-year, just slightly lower than the city economists’ predictions of 2.9%.
Despite this positive news, Reeves’ Budget quickly squashed any hopes for an actual decline in inflation anytime soon. The OBR predict that inflation will increase to an average of 3.2% in 2025 before settling any further. Experts believe it will fall rapidly in 2026 to 2.1%, but it is not expected to reach the Bank of England’s 2% target until 2027 at the earliest. This is due to higher oil and wholesale gas prices.
What the Spring Statement means for my mortgage
Whilst we didn’t see any direct announcements for landlords, SWAP rates will rise slightly following today’s Budget.
SWAP rates are what lenders pay other banks and financial institutions to borrow fixed money for a certain period of time. This charge is then factored into mortgage lender product pricing.
Therefore, we can expect mortgage rates to rise slightly over the coming days to allow the money markets to react and adjust.
With rates and inflation set to rise slowly, discussing your upcoming purchase and refinance options is more important than ever. We can explore all the rates you could access, and many lenders will allow you to move onto a lower rate if one becomes available before your application completes. This gives you the certainty and security you have the best rate on the market for your needs.
Your mortgage plans
To discuss your mortgage options, give us a call on 0345 345 6788 or submit an enquiry here
