After months of speculation, incumbent Chancellor Jeremy Hunt announced the 2023 spring budget this week, delivering a statement filled with new policies and pledges across issues such as corporation tax and childcare. While the entire budget covers a broad range of factors, several policies will directly impact homebuyers and the wider housing market going forward. Below we explore how Hunt’s first budget may shape UK property for the rest of 2023.
Extension to Energy Price Guarantee
The Energy Price Guarantee (EPG) has been extended by three months in a move that could see a typical household save £160.
Initially brought in under Liz Truss, the £2,500 Energy Price Guarantee is designed to protect people from rising energy costs by limiting the amount that suppliers can charge for energy.
While the EPG was set to run until April 2024 under previous leadership, the deadline was changed to March 2023 when Hunt came into the Chancellor role. He’s since extended that deadline to June 2023.
Despite prior predictions suggesting that the EPG would also rise to £3,000, the government is keeping the guarantee at the current rate of £2,500, which means the average dual-fuel energy bill will also be around £2,500 per year.
Without the guarantee and under the current energy price cap guidelines, bills would currently be around £4,200 a year.
This is the most direct measure aimed at homebuyers and tenants in the budget and should go some way in relieving the pressure of rising energy prices that we’ve seen over the last year.
According to Sarah Handley, Money Editor on Ideal Home: "Scrapping the planned hike in the Energy Price Guarantee will be welcome news to households across the country who have been struggling to make ends meet.
But we're still paying more than ever before for the energy we use, and with the end of the Energy Support Scheme, households will no longer see a £66 or £67 reduction on their energy bills. That means that until prices fall further, it's still crucial to try to reduce how much energy you use to keep bills as low as possible."
Ready to start saving some money on your energy bills? You can read our full list of tips here.
Significant Dip in Inflation
With Chancellor Hunt declaring this as the ‘back to work’ budget, it’s no surprise that he touched on inflation. It’s expected that inflation will fall to 2.9% by the end of the year, after it hit 10.7% at the end of 2022.
According to the Office for Budget Responsibility (OBR), the UK will continue to narrowly miss a recession and alongside this significant dip in inflation, the country will also see growth between 2024 and 2027.
This will go someway in relieving fears for new homebuyers, especially those impacted by how inflation affected mortgage rates and unsustainable property prices.
It’s expected that falling inflation will also help many first-time buyers with gathering the necessary deposit for a new property and create a much more stable economy by the end of the year.
Growth Plans and Levelling Up
As part of a broader growth plan, Chancellor Hunt has laid out 12 key regions around established British universities that he hopes to incorporate into the ‘levelling up’ project.
This will make around £100 million available for research projects and further development across the Midlands, as well as further afield.
The 2023 Spring Budget also reforms the policies implemented by previous leaders that impacted how councils bidded for funding.
Instead, Hunt is making £200 million available for local regeneration projects, alongside the core 12 investment regions that will benefit from £80 million over the next five years.
For homebuyers, this will transform large areas of the country with new amenities, strengthen local economies and create new desirable neighbourhoods for people to live in. If you already own property in these areas, it could result in significant property price increases.
Enhanced Childcare Support
One of the largest policies within the Spring Budget 2023 is the changes to childcare support that families can claim. Families are now entitled to thirty hours of free childcare for one and two-year-olds as part of a wider £4 billion expansion in childcare funding.
The government is also looking to endorse ‘wrap around’ care that will relieve pressure on working parents, with Hunt suggesting that schools should offer additional care for children between 8am and 6pm by September 2026.
Both of these measures are designed to help adults across the UK re-enter the workforce, removing the limitations that may stop them from working full time.
At the same time, these measures may also indirectly improve the disposable income of families across the country. With lower childcare costs, the average family will have much more disposable income and thus, potentially more savings to utilise when looking for a new home.
If you want to know more about the latest developments in the UK housing market, you can browse our range of helpful blogs here.