AUTUMN STATEMENT - ANYTHING FOR LAWYERS?

The Chancellor gave his Autumn Statement on 22 November with the strange backdrop of inflation coming down and the country still in a cost-of-living squeeze – but needing to try to give something away due to the impending election in 2024. It was an odd balancing act.

The OBR predicts that the economy will grow in 2024 (by 0.6% in 2023 and 0.7% in 2024) and that inflation is at less than half its peak*. An improving economy is undoubtedly good news for the property market – but there is still a lot of uncertainty. Inflation is expected to continue to fall but it will stay ‘higher for longer’ which will impact on interest rates.

2024 will see a re-balancing of the property market.  It is obvious that interest rates would have to go up from their recent historic lows and property prices would come down.  Many property lawyers are old enough to know that what goes up must come down, and vice versa.  This rebalancing of the market is much needed – a stable property market needs sensible mortgage interest rates. We have avoided the property crash predicted by so many doom mongers; so the market is set fair for 2024.

In my view, we need this stability. The property market is very driven by sentiment – if people feel secure in their jobs, they will move house or get a first step on the property ladder. At times of uncertainty, the market contracts if sentiment is weak. The National Insurance cut announced in the Autumn Statement is welcome, but it is unlikely to put enough money in anyone’s pocket to prompt a sufficient surge in confidence to send more property buyers and sellers to market.

So, in reality there is not much in the Autumn Statement to get property lawyers excited – but we should perhaps be grateful.  What this Autumn Statement did not include is probably more significant than what it did include. A possible cut to Stamp Duty Land Tax (SDLT) had been heavily trailed (but possibly shelved when it received a lukewarm reception).  The property market did not need an SDLT cut coming out of the pandemic and a short term cut now would have proved chaotic for property lawyers.  In the main, all an SDLT cut does is to draw forward a pipeline and squeeze too may transactions into a short timeframe. Recent experience confirms that conveyancing firms were ill equipped to deal with such an influx of work and all that it creates is an artificial market with a cliff edge when the SDLT rates increase again. So even though this Autumn Statement is, at best, neutral for property lawyers, we should perhaps be thankful for small mercies.

*www.assets.publishing.service.gov.uk/media/655e107697196d000d985d6b/E02982473_Autumn_Statement_Nov_23_Accessible_v3.pdf

Stuart Forsdike, Founding Partner of PCS Legal