Last week the autumn statement was announced by Chancellor Jeremy Hunt. This included changes to the income and capital gains tax thresholds, delays in the social care cap, an announcement regarding the energy price cap guarantee (from £2,500 to £3,000 from April) and a lift on the council tax rise cap. But what will it mean for the housing market?

Although it’s too early to know how the financial markets will react to today’s announcement, the statement looks set to reassure the housing market following the fallout of the mini-budget announced in September.

Reassuringly, the Chancellor has published the response from the Office for Budgetary Responsibility (OBR) to the budget following the statement. The OBS believes that the economic downturn will be less severe and that the economy will grow by 4.2% in 2022 before contracting 1.4% next year and recovering to 1.3% in 2024. Inflation will average 9.1% this year but will fall in 2023. This means that the Bank of England will be less likely to raise interest rates, which is good news for mortgage rates in the future.

Activity in the housing market has slowed, given that we are all facing a higher cost of living, rising interest rates and economic uncertainty. The income tax threshold freeze and the higher council tax and energy bills add pressure.

However, the Chancellor announced that the Energy Price Guarantee would continue from April, albeit at a slightly higher level of £3,000, and this will help to reassure homeowners and potential buyers that they will not face a steep increase in their gas and electricity bills come the spring. Not only will this help to increase confidence it will help those worried about mortgage affordability checks in the face of having no price guarantee.

It also appears that unemployment will not increase significantly and will help prevent a high level of forced sales. In addition, the stability brought by the statement is good news for the housing market.

The only issue is that capital gains tax is currently charged at 18% on residential property and 10% on other assets for basic rate taxpayers and 28% and 20%, respectively, for high rate taxpayers with the first £12,300 of gains tax-free. The Chancellor announced that the tax-free threshold is being reduced from £6,000 to £3,000 from April 2024. This will affect those selling buy-to-let properties, not their main home.

This could cause some buy-to-let landlords to sell their properties ahead of the decrease, putting pressure on the rental market.