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The Spring BudgetSummary
On 15 March 2023, the Chancellor, Jeremy Hunt, addressed Parliament with details of the government’s Spring Budget. It didn’t contain a great deal that would directly affect property investors but some of the measures that it contained could have knock-on effects.
Perhaps the most salient of these was the decision to extend the Energy Price Guarantee to June 2023. It won’t actually improve things for investors, per se, but without that decision, market conditions could have been considerably more difficult over the next three months. Essentially, what the decision means is that energy prices won’t rise so high as they otherwise would have done.
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Ordinary households have already seen their finances tightly stretched, but by preserving at least a small proportion of their disposable incomes, the measure should leave a little more money circulating in the economy. That, in turn, could support modest, longerterm growth in rental and capital values. Funding announcements were the other key feature of the Budget. They included the establishment of new ‘Innovation Zones’ that are likely to drive accelerated economic growth in certain British towns and cities. The recipients of the funding haven’t yet been announced – money will be allocated in response to bids – but wherever they are established, local economies, employment and returns on property investment are all likely to improve. A case of “watch this space…”
The same will almost certainly be true of the £20 billion of funding ringfenced for carbon capture and storage projects. Again, no formal announcement has been made, though the principal beneficiaries are expected to be North Wales, Merseyside and the Yorkshire coast. Significantly, however, no money will be released before the next general election. Other notable spending commitments included £400 million for ‘Levelling Up’ partnerships, £200 million for urban regeneration projects, and an estimated £160 million for projects to be delivered by the UK’s various mayoral authorities.
Of more immediate significance was the Office for Budgetary Responsibility’s inflation forecast, which accompanied the Budget. It said that the Consumer Prices Index (CPI) “is expected to fall sharply to 2.9 per cent by the end of 2023, a more rapid decline than we expected in November.” This matters to investors because if CPI falls, the Bank of England could be more likely to start to reduce the base rate of lending, which would mean lower mortgage costs next year and beyond.
For many landlords, a much less palatable announcement was the Chancellor’s confirmation that corporation tax would rise to 25% (up from 19%), which returns the tax burden to levels last seen in 2012. The change came into effect on 1st April 2023.
Overall, however, this was a Budget aimed at restoring stability after many months of both economic and political chaos. Given the limitations on the government’s spending power, radical spending commitments were never likely. However, if the Budget succeeds in nurturing some level of calm and predictability, then that at least will be a welcome result.
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Location Guides
Residential Estates have compiled several resources and guides to property investment locations set for growth in 2023. These guides offer property investors an in-depth insight into each area and what potential growth each area can offer for investors, as well as considering the different types of investment property available.
Each guide will contain a detailed look into the following factors in regards to each region: the local economy, regional inward investment, current developments available, the principal growth sectors, the local housing market and regional investment predictions for 2023 and beyond.
