Ros Rowe, Subject Matter Expert for ICAEW’s Construction & Real Estate Community shares her thoughts on the recent Spring Statement.

As the Chancellor noted, ‘the world has changed’ since the Autumn Budget. While the focus remains on growth, recent action from America has raised concerns about the current strength of European security and global trade restrictions.

The Office for Budget Responsibility (OBR) reports that these geopolitical risks, added to stagnation in domestic output in the last 6 months of 2024, and a reduction in business and consumer confidence, will weaken the likelihood of growth. They halved their forecast for growth from 2% to 1%.

The Chancellor has set out how the Government will respond to these challenges by investing in real estate and infrastructure, while also increasing defence spending, reforming the civil service and welfare provisions, and collecting outstanding taxes.

For the real estate sector, Government plans outlined in the Autumn Budget offer hope for growth in the economy. The OBR estimates that net housing additions could reach 305,000 a year, resulting in 1.3m homes by 2029-30. The benefit to the economy is expected to be 0.2% by 2029-30, increasing to 0.4% by 2034-35, and increased by a further 0.1% due to indirect benefits such as labour mobility. Furthermore, the economy is forecast to grow to 1.9% in 2026 and every year thereafter, reaching 9.4% (9.2% Autumn Statement) for the period Q4 2024 to Q1 2030.

A target was set by the Government for 1.5m new homes in England (not the UK) by the end of this Parliament, but this will be missed as the current projection is for 1.3m new homes in the UK. If net additions reach the projected 305,000 homes per annum for the UK, that is a considerable improvement on the 221,000 estimated net additions achieved in England in 2023-24. However, current Government estimates are that 199,000 net additional homes have been delivered in England up to 23 March 2025 (based on lodgements of Energy Performance Certificates), so the gap between target and achievement may be greater.

On the supply side, the Government is bringing in a package of measures to increase the number of homes and improve infrastructure. While more information is needed to assess the benefits, this is a positive commitment:

• 170,000 new homes are attributed to reforms to the National Planning Policy Network, which are underpinned by more trained planners. In the Autumn Budget, £46m was to be spent in recruitment and graduate training. The Spring Statement is silent on what progress has been made and whether that target can be met.
• A further £2bn is to be invested in social and affordable housing in 2026/27 to deliver up to 18,000 new homes. It is a down payment and a welcome bridge to a new programme of investment into social and affordable housing – more details will be made available in the Spending Review in June.
• A construction skills package of £625m is promised to fund training of 60,000 workers, ranging from bootcamps for workers who are new entrants or need re-training, to more colleges and courses. The Construction Industry Training Board (CITB) will increase support to employers to encourage them to take on apprentices and provide business placements. The Government is also launching an £80 million capital fund to support employers to deliver bespoke training tailored to their needs.
• The Building Safety Levy will be delayed on new homes for a year to prevent delays in housebuilding
• Greater spending on capital investment (£13bn), regulatory reform and the Planning and Infrastructure Bill are to take place. Further information is promised in the June Spending Review.

However, the demand side is more difficult and may reduce worker mobility. Purchasers are likely to have difficulty in saving for a deposit when:

• Increased taxes will raise the cost of buying a home (the first-time buyer benefit that reduced Stamp Duty Land Tax (SDLT) on house purchases up to a value of £625,000 ended on 1 April 2025, and its replacement is less generous)
• Private rents continue to rise – the Office for National Statistics (ONS) reports the latest average increase for the UK is 8.1% for the 12 months to February 2025
• The rise in the minimum wage is unlikely to mitigate these problems

There may be greater demand for social housing, which will reduce taxable receipts, if people are unable to maintain mortgage payments or to pay market rents:

• Reform to the civil service, business response to the Employment Rights Bill and the hike in employers’ national insurance contributions, plus closure of steel mills, are likely to increase unemployment
• Cuts to welfare benefits may reduce household income where work is not available and lead to an uptick in homelessness

The Spring Statement concentrated on a few key issues and enabled the Chancellor to tell a good story about how the real estate sector could deliver growth for the economy. Brief mention was given to Artificial Intelligence but there was no coverage from the Government about boosting other income generating businesses. The real estate sector is not a panacea; there must be more to come. We wait now for the June Spending Review.