Spring budget 2025: key takeaways for the property industry

Chancellor Rachel Reeves delivered her Spring Statement today, and this was accompanied by forecasts from the Office for Budget Responsibility (OBR).

The Chancellor was clear that this was not a ‘fiscal event’ – so while there was some clarification around welfare spending and defence spending, there was no long list of detailed changes to tax and spending that we usually associate with a Budget.

Here are the highlights of today’s announcements:

• The OBR halved its expectations for UK economic growth this year, cutting its forecast to 1% GDP growth, down from its previous forecast for 2% growth. However, it revised up the forecasts for 2026 – 2029, when it said economic activity would be boosted by housebuilding activity. However growth each year will be below 2%. Before the financial crisis in 2008, annual GDP growth in the UK averaged 2.7%

• The OBR forecasts that UK gilt yields will remain elevated, reaching 5.2% in 2029 from 4.3% late last year,  which would put upward pressure on borrowing costs. It does forecast more base rate cuts this year, but expects them to settle at around 3.8% next year, compared to a forecast of 3.6% back in Autumn last year

• The Chancellor says that some 1.3 million new homes will be delivered by the end of this Parliament. She said this was ‘within touching distance’ of the 1.5 million target the Government set itself

• There was a real focus on the economic benefit that this increased activity in the important housebuilding sector, and wider associated sectors, will bring. The Chancellor said that planning reforms reintroducing housing targets and allowing more building on ‘grey belt’, would boost GDP growth by 0.6% of GDP in the next ten years – equal to around £15 billion

• There was no mention of stamp duty, which means thresholds will return to 2022 levels from next week. This means  homemovers in England and Northern Ireland, will start paying stamp duty on properties worth more than £125,000 (down from £250,000) at 5%. First-time buyers will have to pay stamp duty on properties worth more than £300,000 (down from £425,000)

• The Chancellor’s moves around benefits spending means she has some ‘fiscal headroom’ in her budget – but increased cost of borrowing caused by domestic concerns or global volatility could mean that she has to do more large moves around tax and spending in her Autumn Budget to continue balancing the books.

John Gravett, Managing Director of Cluttons, said: “The benefits to the economy from activity in the housebuilding sector are clear from today’s Spring Statement. A fully functioning housebuilding and housing market with more homes being delivered across every tenure not only creates economic growth but allows more people to fulfil their ambitions of living how and where they want. However, funding remains a challenge for some buyers, something which the reduced stamp duty charges helped with. The Government could look at the stamp duty regime again in the Autumn, which may also coincide with some base rate cuts. There was no mention of business rates reform from the Chancellor – helping create more certainty around this tax, especially as National Insurance starts to rise would have been a welcome move.

“There is also room now for the Government to focus on other critical infrastructure, looking at how planning reforms can help loosen bottlenecks and enable more activity to deliver more growth. The recent announcement on funding to boost construction skills aimed at the housebuilding sector are welcome, but there are skills gaps in other sectors, especially energy,  which also need to be addressed if the country is to meet its energy targets.”