Bleak housing market reality behind Budget headlines
Summary
The OBR’s latest Budget analysis paints a subdued outlook for the housing market, warning that higher property income tax on landlords could reduce rental supply and put upward pressure on rents over time. It also forecasts modest house price growth, higher mortgage rates, and weaker housing supply, with regulatory and fiscal changes cited as adding cost and complexity to residential development.
Why it matters
For residential property surveyors, the report signals continued pressure on rental markets, transaction activity and affordability, all of which can affect valuations and client advice. It also highlights how building-safety and environmental policy changes are influencing development viability and delivery timelines.
Key points
- Property income tax for landlords is set to rise by a further 2% from April 2027.
- The OBR warns the tax changes could reduce rental supply and contribute to higher rents over the long term.
- House prices are forecast to rise modestly, but remain below CPI inflation.
- Mortgage rates are expected to increase over the forecast period, weighing on affordability and transactions.
- The OBR links weaker housing supply to building-safety, environmental and fiscal measures affecting residential development.
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