April update

Amid a growing international trade crisis being caused by US President, Donald Trump, the Chancellor of the Exchequer, Rachel Reeves, made a Spring Statement in the House of Commons on Wednesday 27^th March, where housing and house building targets played a prominent part. She pointed to changes to the National Planning Policy Framework (NPPF), saying mandatory housing targets and bringing ‘grey belt’ land into scope for development will ‘permanently increase the level of real GDP by 0.2% by 2029-30’.

But she announced that the Office for Budget Responsibility (OBR) had halved the UK growth forecast for 2025 from 2% to 1%, whilst also saying that the unemployment rate will rise to 4.5% this year. This is 0.4 percentage points or 160,000 people higher than first thought in the October forecast from last year. Growth is expected to reach 1.9% by 2026, 1.8% in 2027, 1.7% in 2028 and 1.8% in 2029.

The government is also investing £2 billion into delivering social and affordable housing provision across the country, as it promises to build 18,000 additional homes. Kate Henderson, chief executive at the National Housing Federation, said: “This funding top-up is hugely welcome and demonstrates the government’s commitment to delivering genuinely affordable, social housing for families in need across the country. The additional £2 billion will prevent a cliff edge in the delivery of new homes, ahead of the next funding programme being announced”.

The government also aims to train 60,000 construction workers to help deliver its target of building 1.5 million new homes by the end of this Parliament.

The Planning and Infrastructure Bill received its second reading in March, Parliamentary timetables show. It is currently going through the committee stages. Expectations are that it will be crucial to the government target of building 1.5 million new homes by the end of this Parliament. The OBR estimates currently that only 1.3 million new homes will be built, and just 10% of these homes are likely to be delivered directly due to planning reforms and changes in the new NPPF.

Economy:

Inflation Rates – In February, inflation was reduced from 3% to 2.8%. The Consumer Price Index (CPI) fell to 2.8% in the twelve months to February 2025, down from 3% in the last twelve months to January. The OBR are estimating inflation will rise to 3.2% in 2025.
Interest Rates – The Bank of England decided to hold interest rates at 5.25% in February.
GDP Growth – The OBR has halved the UK’s GDP growth forecast from 2% to 1% in 2025
Pound against the Euro – The Pound Sterling held steady against the Euro and US Dollar in March, as markets reacted to the latest UK inflation data. Lower inflation has temporarily eased concerns about rising UK borrowing costs, calming and encouraging investors.
House Market prices- Average house prices increased to £371,870 in March. Leading UK Estate agencies are predicting moderate house price growth in 2025 of between 2.5% and 4%.
Unemployment rates- The UK employment rate increased slightly to 75%, according to November to January 2025 data. The unemployment rate stayed at around 4.4%. Two factors above all are likely to affect hiring plans and unemployment in 2025: businesses that employ minimum wage employees are set to face a steep increase in national insurance tax. Employers’ contributions will go up to £2,583 from £1,617. This will of course discourage hiring. This combined with the second factor of the expected increase to the National Minimum Wage, the total cost of employing a full-time worker on minimum wage will have risen by £2,367 compared to the previous year.

Bills in Parliament:

Planning and Infrastructure Bill – This bill received its second reading on 24^th The legislation reforms the planning system by liberalising the rules and incentivising developers to build more houses, as well as placing new stricter requirements on local councils to meet their housing eligibility requirements, subject to central government targets.
Great British Energy Bill – The GB Energy Bill received final amendment considerations from the House of Lords on 25^th March, and will shortly receive royal assent.

Current Affairs Related to Housing:

NPPF changes will result in 1.3 million homes built by the end of the parliament, OBR forecasts. Housebuilding to exceed 300,000 homes a year by 2029/30, excluding impact of forthcoming Affordable Homes Programme. The government’s changes to the National Planning Policy Framework (NPPF) will result in the construction of 1.3 million homes during the course of this parliament, the Office for Budget Responsibility (OBR) has said.
Five housing associations handed top grade for consumer standards. Places for People, LiveWest, Midland Heart, Thirteen Group and Cross Keys have been given the top grade for consumer standards following their first inspections by the Regulator of Social Housing (RSH). Councils have fared less well under the regime. A string of them has been handed non-compliant grades since the measure was introduced last April. Today, four out of the five landlords received a clean sweep of top grades by also getting G1/V1 grades.
Spring Statement: OBR admits ‘significant uncertainties’ over forecast of 40-year housebuilding high. The government’s planning reforms could result in annual housebuilding hitting a 40-year high of 305,000 homes, although several factors could knock that estimate, the OBR has said.
Government announces major social housing initiative to tackle housing crisis. The Government has announced plans to construct thousands of new homes in England, marking what is being hailed as the most significant increase in social and affordable housing for a generation. Chancellor Rachel Reeves has committed to a £2 billion grant fund that is poised to create up to 18,000 new homes across England, a move she believes will contribute toward “fixing the housing crisis.”
London housing market facing ‘stamp duty hangover’ ahead of rise in buying costs. A stamp duty “hangover” has struck London, with demand from home buyers falling back, according to an index. Zoopla estimates that around eight in 10 first-time buyers in London will pay stamp duty from April 2025, compared with less than half under current thresholds. From April, the “nil-rate” stamp duty threshold for first-time buyers is set to reduce from £425,000 to £300,000, among other changes.