Rachel Reeves fails to impress, according to sector reaction
In her much anticipated Spring Statement, Chancellor Rachel Reeves (pictured) told the House of Commons that Labour inherited a planning system that was ‘far too slow’ - and its reforms will lead to a 40-year high in house building.
Reeves said the government expects to build 1.3 million homes in the UK in the next five years – equating to 305,000 homes every 12 months. Inflation will hit its 2% target by 2027, the Chancellor insisted.
She also acknowledged that the Office for Budget Responsibility (OBR) had revised down economic growth for this year – from 2% to 1% - but had upgraded growth for next year and the following three years. Households would be £500 better off as a result, she said.
In a swipe at the infamous mini-budget conceived by Prime Minister Liz Truss and Chancellor Kwasi Kwarteng in 2022, she said: “The British people have seen what happens when a government borrows beyond its means. That budget resulted in higher bills, higher rents and higher mortgages.” Looking towards the Tory front benches, Reeves said: “It was not the wealthy that suffered most when they crashed the economy. It was ordinary working people.”
The Chancellor said Labour’s task is to secure Britain’s future in a world that has changed since President Putin invaded Ukraine. “The global economy has become more uncertain, bringing insecurity at home as trading patterns become more unstable and borrowing costs rise for many major economies,” she said. Reeves added that the new fiscal rules she had laid out to guide the government are “non-negotiable” - the Government has an unwavering commitment to bring stability to the UK economy, she emphasised.
Turning to planning reforms, Reeves said: “The planning system that we inherited was far too slow. The OBR have concluded that our reforms will lead to house building reaching a 40-year high – 305,000 homes a year.” Changes to the national planning policy would help build over 1.3 million homes in the UK within the next five years - within "touching distance" of the government’s promise to build 1.5 million homes in England, she added.
Shadow Chancellor Mel Stride described the statement as an “emergency budget” and said it had brought the Chancellor to a “cold, hard reckoning”. Stride added: “She has become very fond recently of saying the world has changed, well indeed it has. This country was growing at the fastest rate in the G7 only about a year ago.”
But, importantly, how have the mortgage and associated industries reacted? The response is not entirely warm.
Ben Thompson (pictured left), deputy CEO of Mortgage Advice Bureau, commented that there was little for aspiring first time buyers or home movers to get excited about. "The focus now must shift towards more direction and innovation from regulators and lenders to support a larger pool of borrowers and open up the housing market,” Thompson commented. “Responsible lending proposals to consider relaxing affordability criteria and LTI (loan to income) caps, and the development of mortgage products that focus on rental track records are just some of the options that would be welcomed with open arms, making homeownership more accessible and affordable.” He added: “We’ve also long campaigned that those who buy or retrofit their homes to a higher EPC rating should be rewarded. This is alongside pushing for more concrete investment to encourage retrofitting 29 million of UK homes. We believe this can be achieved through offering a Stamp Duty refund to those who buy and then retrofit to an EPC rating of C or above.”
John Phillips (pictured second from left), CEO of the Spicerhaart estate agency chain and Just Mortgages, noted the Chancellor’s optimism about hitting house building targets. “If this is achieved – and it’s a big if – this would clearly be fantastic news,” commented Phillips. “Today’s statement really offered nothing new and once again demonstrates the clear disconnect within government between supply-side measures and tangible action and support to actually address affordability challenges faced by potential buyers in today’s housing market. The housing market plays a critical role in driving economic growth. While increasing supply is absolutely critical, we need measures now to give buyers the ability to buy – not just to enable people to achieve their homeownership goals, but to give the economy the adrenaline shot it needs.”
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Was the Chancellor’s Spring Statement a missed opportunity?
For Mark Harris (pictured second from right), chief executive of mortgage broker SPF Private Clients, the Spring Statement was “underwhelming” as far as the housing market is concerned. “The Chancellor missed an opportunity to boost all-important transactions by extending the Stamp Duty concession or introducing some discount for downsizers,” Harris said. “She also did nothing for first-time buyers, with no incentives or assistance to get them on the housing ladder – a significant shame as first-time buyers are the lifeblood of the market and enable existing homeowners to move up the ladder. Housebuilding, easing planning rules and improving the supply of new homes is vital but there was very little detail as to how these targets will be delivered.”
Meanwhile, Luther Yeates (pictured right) , head of mortgages at Orton Financial, believes the real issue is the capacity to process planning applications efficiently and ensure consistency in decisions. “Simply increasing the number of applications won’t fix a system that’s already struggling,” Yeates said. “Retrofitting and refurbishing existing properties is generally cheaper, faster, and greener than building new homes, plus, it reduces carbon emissions and boosts local skills. Yet, instead of a strategic approach to reviving empty homes, the focus remains on large-scale developments that will take years to materialise. Councils should be incentivised to work with property owners to bring homes back into use.”
Mortgage adviser Jag Singh, from Morgan Financial Solutions, commented: “I want to be positive as the year has been good to me so far, but I see issues ahead for BTL landlords being squeezed by local councils, tax and Stamp Duty. Labour’s push for planning reform is welcome, but rhetoric must translate into action. Much of the latest policy discussion simply reiterates previous commitments - they need a strong, growing economy that instils long-term confidence. The OBR’s weak forecasts highlight the urgency of boosting GDP. Meanwhile, key market indicators remain positive: house prices are rising, inflation is easing, and the base rate is expected to fall. Given the property sector’s vital role in GDP, the Chancellor must prioritise support for homebuyers and borrowers in future budgets to sustain momentum and drive growth.”
Paresh Raja, CEO of Market Financial Solutions, said the government’s ‘get Britain building’ rhetoric must now translate into tangible action. “Much of today's speech involved repeating the Autumn Budget's plans to encourage housebuilding,” Raja observed. “Reforming the planning system is obviously important. However, investors and developers are unlikely to commit to new projects unless they see a strong and growing economy that provides long-term confidence and a return on their investment. The OBR forecasts were a blow in this regard, and the onus must now be on turning the corner to turbo-charge GDP growth. We need the Chancellor to focus more energy on supporting homebuyers and borrowers, which will further stimulate growth in the market."
The Chancellor’s statement was a missed opportunity to help the estimated 75,000 people who are expected to miss next week’s Stamp Duty deadline, said Tony Hall, head of business development at Saffron for Intermediaries. “As a result of the existing backlog, we’re hearing from brokers that cases opened as early as January are unlikely to close in time, dealing unexpected tax blows onto many prospective homeowners,” Hall noted. “We should be helping these people get onto the property ladder – for instance, through progressive affordability criteria that takes into account rent payments – rather than creating more hurdles for them to overcome in order to realise their housing aspirations.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman said: “We are disappointed there wasn’t more direct assistance for the private sector, particularly SMEs who cumulatively can make such a big difference to the overall problem. Builders won’t build unless it is profitable for them to do so and there is reasonable prospect of adequate demand for the product envisaged. It would have been good to see some recognition of this.” He continued: “It also seems a little unfair on those who have moved heaven and earth to take advantage of the Stamp Duty concession before it disappears but who may not make it, through no fault of their own. The deadline could perhaps have been extended for those transactions in solicitors’ hands from the beginning of February, as a small respite.”
Simon Webb, managing director of capital markets and finance at LiveMore, said the Spring Statement reinforced the need for the industry to take the lead in driving change for mid-to-later-life borrowers, many of whom struggle to access suitable mortgage products despite being financially responsible.
“We know the challenges – rigid affordability criteria, a lack of mortgage flexibility, and a tax system that discourages downsizing,” Webb said. “While government support would have helped, the sector has the expertise and capability to push forward regardless. Collaboration will be key. Lenders, brokers, and policymakers must work together to make the later life mortgage market more accessible. Expanding mortgage flexibility, streamlining application processes, and developing new products that better reflect later-life incomes are all within our reach.”
The suggestion that the government may only be within ‘touching distance’ by 2030 of reaching its house building target may be over optimistic, said Ryan Etchells, chief commercial officer at specialist lender Together. “Hearing we're on track to deliver over 1.3 million homes sounds good, but we're still lacking significant information on how this will be achieved,” said Etchells. “We're also yet to hear if greater support and incentives for small and medium-sized developers has been considered. This is vital as we need to encourage these developers to create energy efficient and sustainable homes to high standards in the areas where they’re needed most. Volume and big headline targets are one thing - but actually solving the housing puzzle is another matter entirely.”
