November Update

Parliament returned on 7th October from party conference season, allowing the government to continue enacting new legislation to deliver its election promises.

Mortgage approvals

Housing market analysis of the UK published in October stated that mortgage approvals had jumped in September compared to August by 700, representing a two-year high in approvals. This coincides with a reduction in the cost of borrowing for consumers.

Alice Haine, personal finance analyst for Bestinvest by Evelyn Partners, said: “Lower inflation, improving borrowing conditions and robust income growth have eased the affordability challenge for many buyers in recent weeks following the Bank of England’s decision to make its first interest rate cut since the start of the pandemic.”

Budget

On 30th October, the Chancellor, Rachel Reeves, delivered her first annual budget. In the budget, there was a distinct focus on long-term investment in public services, restoring economic stability and boosting growth in the economy. Through a policy prescription of liberalising planning laws, extra investment for large infrastructure projects and bolstering the public sector through technology.

A clear signal of ‘no return to austerity’ means this budget is a large tax-raising budget of £40 billion, one of the biggest ever. The Chancellor is keen to plug the alleged ‘£22 billion black hole’ left behind by the previous Conservative government.

Economy

GDP is estimated (ONS) to have grown by 0.2% June-August 2024 compared to the previous three-month period. It is estimated to have grown by 0.2% in August compared to 0.0% in July. This compares to revised GDP growth for the second quarter of 0.5% and the first quarter (January-March) revised down from growth of 0.6%. Projected GDP growth figures from the OBR are up this year to 2% and next, but downgraded over the next few years to 1.8 and 1.5% in 2026, 2027 and 2028.

Zedelle

Inflation in October was 1.7%, remaining below the Bank of England’s 2% target. The Bank held interest rates at 5% in October, but on 7 November, reduced them by 0.25% to 4.75%. The reduction was expected but the bank warned that future falls will be slow and steady.

House prices were recorded as the fastest annual price growth in two years, with prices up by 3.2% in September. Northern Ireland was the best performer, with prices up by 8.6% in Q3.

Planning applications in Britain continue to dwindle at a ‘decade-low’, as developers struggle with a volatile housing market still burdened by red tape and overregulation.

Comprehensive Spending Review

According to The Guardian, a comprehensive spending review (CSR) lasting one year should keep most areas of government protected from inflation before the introduction of a three-year CSR next spring.

Hospitals are expected to be the biggest beneficiary of any spare cash, with GPs also likely to find they get more.

TThe biggest area of growth will be public investment. Projects such as committing to building the HS2 rail link between Old Oak Common and Euston are expected to be confirmed.

Employment Rights Bill

Details for the Employment Rights Bill were published on 10th October, with repercussions for all sectors. Employees within the industry will have day one rights for unfair dismissal, the right to statutory sick pay as well as bereavement leave.

Fire and re-hire will effectively be banned, and Zero Hours Contracts will be adjusted too with a requirement for employers to publish guaranteed hours after a period of 12 weeks.

Affordable Homes

Funding of £500 million was announced by Reeves for the Affordable Homes programme and aid the delivery of 5,000 new social affordable homes for Britain.

According to a recent white paper, the government will set out details of new investment to succeed the 2021-26 Affordable Homes Programme at the Spending Review. This will lay the foundations for the manifesto commitment to deliver the biggest increase in social and affordable housebuilding in a generation, and to support councils and housing associations to build their capacity and make a greater contribution to affordable housing supply.

On housing, Reeves committed to 1.5 million new homes and an investment of £3.1 billion for affordable housing.

She also introduced a requirement for local authorities to invest the entirety of receipts from right to buy schemes back into social housing commitments. Previously, the government has only reserved part of these receipts for this purpose.

She also discussed hiring over 300 new planning officers over time to help with the planning backlog caused by recruitment issues.