Spring Statement 2025: Key Takeaways for Housing, Mortgages, and Inflation

Spring Statement 2025: Key Takeaways for Housing, Mortgages, and Inflation

Chancellor Rachel Reeves delivered her first Spring Statement on March 26th, setting out the government’s latest fiscal and economic measures. With a backdrop of cautious optimism surrounding the UK’s economic recovery, the statement contained several developments relevant to the housing market, mortgage borrowers, and the inflation outlook.

Housing Market – Supply and Demand

One of the most significant pledges was the government’s commitment to building 1.3 million new homes over the next five years. This move is aimed at addressing the ongoing supply shortage. The Chancellor emphasised the importance of supporting first-time buyers, with further schemes hinted at to ease affordability pressures.

The planned expansion in housebuilding is also designed to support economic growth by creating jobs and unlocking investment in construction and infrastructure. While specific planning reforms were not outlined in detail, the government signalled its intent to streamline approval processes, reduce bureaucracy, and incentivise local councils to approve more developments. This could create a more favourable environment for property developers, particularly those delivering high-density or affordable housing in priority growth areas.

Affordable Homes – Additional Budget of £2 Billion

An additional £2 billion has been allocated to the Affordable Homes Programme for the 2026–27 financial year. This funding is projected to facilitate the creation of up to 18,000 affordable and social homes across England. This expanded budget is expected to enable the delivery of up to 18,000 new affordable and social homes across the country, helping to meet the growing demand for accessible housing.

The funding aims to support a wide range of communities, ensuring that more individuals and families have the opportunity to live in safe, secure, and affordable homes. This move forms part of the government’s broader strategy to tackle the housing crisis and promote long-term social and economic stability.

Mortgage Schemes – Is Help to Buy Returning?

In her address, the Chancellor acknowledged that despite a cooling property market, affordability has continued to deteriorate—particularly in major cities where wage growth has lagged behind housing costs. She reiterated the government’s commitment to addressing these challenges and noted that upcoming proposals would focus on reducing the barriers to entry for young professionals and families trying to get onto the property ladder.

Potential schemes under consideration are believed to include a refreshed version of Help to Buy or a deposit support programme, possibly involving government-backed loans or equity support in partnership with banks. There is also speculation that the government may explore further Stamp Duty reductions for first-time buyers or introduce targeted tax relief for those purchasing properties below certain thresholds.

Beyond financial support, the Chancellor highlighted the need to boost supply in areas with the highest demand, including zones near key employment centres. There was a clear indication that housing initiatives will align closely with infrastructure investment and local economic development—focusing on sustainable communities rather than short-term fixes.

For now, first-time buyers are encouraged to watch this space, with a more comprehensive housing plan expected in the main Budget or in the government’s housing strategy later this year.

Mortgages: Relief May Be in Sight

The mortgage market has been under strain in recent years due to persistent inflation and rising interest rates. However, confidence is growing that borrowers may soon see relief. The Office for Budget Responsibility (OBR) now forecasts that inflation will fall to 2.8% later this year, a sharp decline from recent peaks.

This improved outlook raises the prospect of the Bank of England cutting interest rates sooner than previously expected. Should this happen, mortgage rates may begin to ease, benefiting both new buyers and existing borrowers coming off fixed-rate deals.

Nonetheless, lenders are likely to remain cautious in the near term, with affordability assessments continuing to factor in rate volatility and ongoing cost-of-living pressures.

CGT Cuts to Encourage Sales

To stimulate housing market activity, the Chancellor announced a reduction in the higher rate of Capital Gains Tax (CGT) on residential property. From April 6th, the rate will fall from 28% to 24%, making it more attractive for landlords and second-home owners to sell.

This change could lead to an increase in property listings, particularly among those exiting the buy-to-let market or rebalancing portfolios. The Treasury expects the cut to drive higher transaction volumes and ultimately increase overall tax revenue, despite the lower rate.

ISA Adjustments

While not directly housing-related, the government proposed reforms to the ISA system. Notably, there’s a proposal to cap annual contributions to cash ISAs at £4,000, to encourage more long-term investment into equities and businesses rather than passive saving.

Although this targets capital markets, it could influence personal finance behaviours, especially among younger savers and prospective homebuyers who often use ISAs to build deposit funds.

Final Thoughts

The Spring Statement 2025 delivers a cautiously optimistic message for the housing and mortgage sectors. With inflation expected to ease and interest rate cuts potentially on the horizon, market conditions may begin to stabilise after a turbulent period.

For first-time buyers and property investors alike, the government’s renewed focus on boosting supply, revisiting buyer support schemes, and stimulating property transactions through tax reform represents a welcome shift.

While the details of some initiatives remain pending, the direction of travel is clear: a more proactive approach to housing policy, underpinned by long-term infrastructure planning and improved access to ownership. If these ambitions are followed through in the main Budget later this year, the landscape could become increasingly favourable for buyers, borrowers, and developers alike.

Please note: This article is intended for informational purposes only and does not constitute financial advice. The information contained herein is based on market conditions and opinions at the time of publication and is subject to change without notice. This article may contain references to or summaries of market research reports or analyses prepared by external providers. Henry Dannell does not endorse or adopt the views expressed in any such third-party reports. We recommend that you review the original research reports before making any decisions based on their content. Please also note: a mortgage is secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.