In its inaugural budget statement, the new Labour government has implemented tax rises amounting to £40bn, alongside a new strategic growth plan. Here, we take a deeper dive into the implications of these new policy directives on the property industry, and our areas of expertise.

RESTORING ECONOMIC STABILITY?

In this Autumn Budget. Chancellor Rachel Reeves provided an insight into the fiscal direction and economic growth strategy of the new Labour government – which it says is focused on restoring economic stability and protecting workers. The government envisions that this approach will be the start of a decade-long national renewal - with the very foundations needing to be fixed in order to drive meaningful change. Central to the government’s economic growth strategy is ‘The Growth Mission’ – which comprises seven key areas of focus.

What is certain is that this direction marks a distinct change from the previous government’s approach and will have wide ranging implications for the property industry.

HOUSING DELIVERY

The government’s commitment to ‘Get Britain Building Again’ was reaffirmed, along with the pledge to deliver 1.5m new homes over the course of this Parliament. This was supported by the announcement that £5bn of government investment will be allocated to housing delivery (starting next year) - including directing immediate funding to the provision of affordable housing – with a particular prioritisation of social rent products.

In addition, affordable housing delivery will be accelerated by a £500m top-up to the current Affordable Homes Programme– aimed at facilitating the delivery of 5,000 new affordable homes. The government also confirmed that the Affordable Homes Programme will be increased to £3.1bn by 2025/26. Underscoring the importance of delivering new affordable housing to this government. It was also reiterated yesterday that Labour will need to have the ‘right policies in place to increase the supply of affordable housing’. In light of this, it is anticipated that Local Planning Authorities will now begin to specify expectations for social rent within their policies.

Reeves also announced that tenant discounts will be reduced on the Right to Buy scheme, and that Councils will be able to keep all of the sales receipts generated. Additionally, a new long-term social housing rent settlement of CPI+1% for 5 years will offer long-term certainty for social housing providers. This will reduce the risk for social housing providers and give them the confidence to build social housing at a faster pace.

Reeves also pledged £3bn of support via housing guarantee schemes to boost the supply of homes and support small housebuilders. This will help smaller developers gain access to lower loan costs, which is envisaged to support the delivery of more new homes. It is understood that this will fund the government’s New Homes Accelerator programme which has been introduced as an early intervention to accelerate the delivery of stalled sites which are currently blocked-in planning.  Early analysis has estimated that 200 large sites across the Country have outline or detailed plans ready to implement but are stalled and are yet to begin construction. These sites could deliver up to 300,000 homes at Liverpool Docks and Northstowe.

The Chancellor also announced an initiative to employ hundreds of new planning officers as part of Labour’s intentions to unlock the planning system and ‘get Britain Building Again’.  It is anticipated that 300 officers will be hired across England, equating to roughly one officer per Local Planning Authority. This is good news although raises questions as to whether this will be enough to help fully resource planning departments. The rejuvenated ATLAS services announced a few weeks ago, however, is promising.

No detail has been provided to date on whether these will be strategic/policy planners and/or development management planners. An increase in the number of development management planners will help relieve the backlog of applications and workloads of LPAs. However, at a recent IED event, it was suggested that there may be c. 75-80% of the country with no allocations or Local Plans in place by next year. Strategic/policy planners will help progress plans and lead to plan-led housing delivery.

The government will also continue to take action to ensure that the planning system supports public and private investment through responding to the National Planning Policy Framework consultation before the end of the year to confirm pro-growth reforms to the planning system.  Additionally, the government plan to implement legislative changes to ensure a simplified and streamlined planning system through the Planning and Infrastructure Bill to be introduced in Parliament early next year.

THE HIGH STREET

It was noticeable that this government continues to recognise the importance of our town centres and high streets - and is seeking to protect and support high street businesses, with a proposed reform to business rates. This issue has long been identified as a major concern for small town centre business and was raised more widely by respondents in our joint LSH/Revo Report earlier this year and the budget announcement is likely to be welcomed as a result. 

The intention to introduce permanently lower multipliers for retail, hospitality, and leisure properties with a rateable value under £500,000 was announced with effect from April 2026-27. We anticipate that this will likely benefit many smaller businesses and help manage their operating costs. However, any benefits will need to be set against increased employer costs through higher National Insurance contributions and the National Living Wage.

There will also be 40% relief on business rates for the retail, hospitality, and leisure industry in 2025-26, up to a cap of £110,000 per business. While Employer National Insurance contributions will increase by 1.2% to 15% and its threshold will be reduced from £9,500 to £5,000, increasing costs for retail, leisure, and hospitality businesses (as well as other industries) which are reliant on low paid jobs.

TRANSPORT / INFRASTRUCTURE

Public services and infrastructure have been prioritised for investment by the government. In addition to existing commitments to deliver 1.5m new homes over the next five years, the government has upped the ante by making a commitment to deliver more infrastructure in the north of England. The TransPennine Route Upgrade, the West Yorkshire Mass Transit scheme, as well as investment in railway stations in Bradford and Manchester were announced. Further commitments were made to the East-West Rail scheme to unlock housing and employment opportunities in the golden triangle which has lacked investment in public transport.

With so much focus on infrastructure, this will no doubt require the use of CPO powers to assemble land to deliver these schemes. In the Kings Speech in July, it was announced the government would be bringing forward the Planning and Infrastructure Bill next year. It is expected the detail of how large scale infrastructure could be delivered more quickly and at less cost to the public purse would be set out in that Bill.  A streamlining of NSIPs (nationally significant infrastructure projects) and “fairer” compensation are expected to be detailed in the Bill.

While the government’s budget is ambitious in its economic growth and spend targets, in order to deliver change it will need to ensure public bodies have powers to deliver quickly and those landowners impacted by infrastructure schemes can access compensation quickly. The two don’t always go hand in hand and  previous experience has shown how quickly costs can balloon with discontent spilling over into communities frustrated by processes.

HS2 was mentioned in almost a hushed whisper. The  link between Old Oak Station and Euston has been put back on the table with a commitment to funding for tunnelling works. The previous government announced a development corporation should be set up to fund the cost of the works. This government has not gone that far but are seeking to use public funding as a catalyst to stimulate investment in housing and jobs for the “Euston Quarter” area.

Whilst the use of compulsory purchase powers was not specifically mentioned, changes to taxation will no doubt create uncertainty for landowners and businesses impacted by changes to tax thresholds for Capital Gains Tax. Greater tax levels will mean less monies available to landowners and business to buy replacement properties within the roll over relief period; whether the exemptions will still apply to small part disposals is yet to be confirmed.

THE NATIONAL HEALTH SERVICE (NHS)

The government announced a ten-year plan for the NHS yesterday. More detail on this plan is to follow in due course – which will need to confirm how the funding will be spent, and implemented given the need for more NHS staff. However, £22.6bn has been pledged to support the NHS in England - to deliver an additional 40,000 elective appointments a week.

Capital investment of £1.5bn has been provided to deliver more than 30,000 NHS procedures, 1.25m more diagnostics tests, and new beds. While £1bn of capital investment has been allocated to reduce the backlog of critical NHS maintenance, repairs, and upgrades.

SCHOOLS / GROWTH SECTORS

Government investment of £6.7bn is to be allocated to the Department for Education - comprising of £1.4bn to rebuild over 500 schools in greatest need and £2.1bn to improve maintenance in schools.  Reeves also confirmed investment in growth sectors which will be the industries of the future such as green hydrogen and the life sciences sector with £520 million set to been given to a new life sciences manufacturing fund, which is welcome news.

CLOSING

Many of the finer details remain to be seen on the fiscal direction and economy growth strategy being pursued by the new government. However, as a business, we remain committed to being fully abreast of these changes and are focused on ensuring that we provide our clients with the best possible market facing advice so we can continue supporting our clients to operate their businesses effectively in line with the new fiscal direction being pursued by the Labour government.