Search Acumen comments on the Spring Budget 2024

Andy Sommerville , Director at Search Acumen, the property data and insight provider, comments:

“Reducing National Insurance will put some cash back in the pockets of would-be buyers, while cutting capital gains tax will incentivise more sellers. Together that could support increased short-term activity in the residential market however we need to bear in mind the impact of fiscal drag will likely mean many people that benefit from a boost to their personal finances may end up actually paying more tax in the medium term, while interest rates still remain challenging for borrowers. Funding for housebuilding in specific areas may also support property market growth in those locations, but there was nothing in the Budget that tackles more fundamental structural supply side challenges in the housebuilding sector nationwide, which is what is really needed to deliver sustainable growth.

“With regards to the commercial property market, what will really unlock growth is getting the cost of capital down. It is unlikely that the tax cuts in this budget will bring inflation down any faster to support the Bank of England in lowering rates on a more rapid timescale.

“In terms of how the budget might impact property law firms, our latest research showed that the number of active firms dropped below 3,900 for the first time outside of the pandemic in August 2023 and has remained at that new low ever since. Similarly, we’ve seen a consolidation amongst the larger firms as smaller businesses struggle with the economic headwinds. The Chancellor’s changes to VAT registration thresholds therefore may help some smaller companies but they will almost certainly be far too minor to boost the proportion of SMEs and new market entrants in any meaningful way, which will mean the trend towards consolidation with larger law firms will likely continue.”