What to look for in the Budget 2025

Five key areas to watch out for:

(1) Will the OBR change its housebuilding forecast? Read more here

(2) Could the Government announce anew national building programme to tackle the temporary accommodation crisis? Read more here

(3) Build it now – will priority for funding and resources be channelled into 'shovel ready' schemes? Read more here

(4) Will the Government bring in targeted Buyer Side support measures, for first time buyers and lower income households, like equity loans or deposit support? Read more here

(5) Will the Government bring in new property taxes – and if so, will these be likely to boost or reduce housebuilding activity and investment? Read more here

This 2025 Budget will be a strong indication of the priority placed on the issues affecting housing and housing delivery and how the target of 1.5 million homes this Parliament will be met.

Will the OBR change its housebuilding forecast?

Will the OBR change its housebuilding forecast?

The Spending Review in March contained a housing forecast from the OBR that surprised many. Usually cautious around the impact of government programmes, the OBR was bullish about housing delivery writing:

"From a 12-year low in 2025-26, net additions to the UK housing stock are forecast to reach 305,000 a year by the end of the decade. From 2025-26 to 2029-30, we project around 1.3 million cumulative net additions to the housing stock. Of this, we estimate an additional 170,000 are due to the Government's reforms to the National Planning Policy Framework".

This positive outlook was notwithstanding significant areas of risk that the OBR highlighted around higher housing delivery including capacity within the housebuilding sector to deliver a rapid acceleration and local opposition to reforms that could prevent or delay housebuilding.

Ahead of this year's Budget, the housebuilding industry body, HBF, is reported to have made representations to the OBR in which they have warned of current market conditions and the risks for achieving higher building targets, including higher taxes and levies faced by the housing industry. A key question is whether the OBR revises its housing forecast and, if so, whether there will be any resultant impact on GDP and growth.

A new national building programme to tackle the temporary accommodation crisis?

Could the Government announce a new national building programme to tackle the temporary accommodation crisis ?

With an increasingly serious temporary accommodation crisis, there is an opportunity to remove red tape and prioritise innovative programmes to provide the housing that is required. The Housing & Finance Institute's 'Operation Homemaker' provides a template for the type of new approach that could be introduced to provide more temporary accommodation – a bricks & mortar approach that could see more homes built faster to meet temporary accommodation needs and provide lasting and secure homes for people in need.

Recent MHCLG statistics showed that as at 30 June 2025, over 132,410 households were in temporary accommodation, an increase of 7.6% from the previous year. Households with children in temporary accommodation increased by 7.5% to 84,240, and single households in temporary accommodation increased by 7.9% to 48,170.

Solving the temporary accommodation crisis should be recognised as priority building programme of nationally significant infrastructure, with dedicated funding prioritised for immediate deployment from the Government's £39billion capital funding programme, matched with institutional funding, together with the fast tracking of planning through a new permitted development emergency accommodation regime.

A national priority building programme of over 100,000 homes would not only help the many households in greatest need of housing, it would also provide a much needed boost to housebuilders across the country, boosting economic growth in the process.

Priority for 'Shovel-Ready' Schemes?

Build it now – will priority for funding and resources be channelled into 'shovel ready' schemes?

The Government has made some moves to support building projects that are ready to go ('shovel ready'). However, with reports of over 1 million homes permissioned and up to a third not built out, there is significant scope for the government to expand efforts to prioritise Shovel Ready schemes and simplify regulation on schemes that could get going in the next 6-12 months. This sort of near-term boost could provide a significant and immediate stimulus.

To help smaller builders, a dedicated fast-track unit within Homes England could be set up to provide additional support to smaller builders in order to help negotiate and remove red tape and blockers at a local level with local councils.

More widely, dedicated support around planning, regulatory and finance issues should be brought together with a time limited more flexible approach to breaking down barriers to delivery.

Institutional investors, for both affordable and build-to-rent markets, still face additional tax (e.g. SDLT) and regulatory hurdles, compared to other market participants. Removing these barriers is critical to unlocking a wall of capital investment waiting to be deployed into housing.

Shovel-Ready funding should be prioritised within the current allocations for MHCLG in 2026 and 2027 in order to ensure that the intended Government support for growth can be delivered within the funding envelope of this Parliament. That means reshaping and allocating funding programmes, including equity loans and guarantees, to those builders and councils who will commit to accelerate housebuilding through a targeted 'build it now' approach.

Buyer-Side Mortgage Deposit Support?

Will the Government bring in targeted Buyer Side support measures, for first time buyers and lower income households?

It's a simple statement but an important one: for builders to build, there must be buyers to buy. Greater support for buyers is needed to boost housebuilding and it is vital to see new buyer support measures in the Budget.

In spite of lower interest rates, home buying remains sluggish. Many housebuilders are having to sell to rental landlords at bulk discounts to counter the current market headwinds. In turn, this reduces housebuilder profits and affects investment decisions in opening new sites, contributing to lower housebuilding activity overall. It also means more renting and less home ownership.

A healthy housing market is one with a healthy proportion of home buyers. There are a range of measures that could support increased new homes buyer activity. The priority must be a new type of buyer support scheme for newly built homes.

HM Treasury is understood to be keen on see greater opportunity for home ownership, particularly for those on lower incomes as well as wanting to see house building numbers grow. Home ownership is an expressed priority of the Prime Minister. This will be a key area to watch in the Budget.

At the Housing & Finance Institute, we have recommended that the following buyer support measures should be considered:

- Pension deposit flex: allowing pension scheme flexibility to help young people save for their first deposit. For example through a pension diversion scheme that would allow workers to opt to pay their pension contribution and employer top up into a savings ISA for up to 5 years. This could unlock significant deposit savings for younger workers, with anything over and above the deposit required for their new home going back (tax free) into their pension pot.

- LISA: reviewing and updating the Lifetime ISA. The LISA (and its predecessor Help to Buy ISA) is a hugely successful savings scheme to support buyers to save for a home deposit. There were over 1.3 million accounts in 2023/24. However, it is not suited to every regional market or every saver, and needs updating to support home buyers in the years to come, particularly in London and parts of the South East.

- Equity Loans: bringing in targeted equity loan schemes for those buyers of new homes who are on lower and middle incomes.

- Alternatives to shared ownership schemes: There is scope for new discounted and deferred purchase schemes to offer an alternative to shared ownership.

As noted above, previous Help to Buy schemes stimulated growth with a peak expansion rate of over 15% in 2014 and 2016. Targeted buyer support intervention remains the surest way to get building rates back on track towards the 1.5million homes target - and boost national economic growth too.

Property taxes?

Will the Government bring in new property taxes – and if so, will these be likely to boost or reduce housebuilding activity and investment?

There is much speculation that the Budget will contain additional property taxes.

Proposals mooted ahead of the Budget are familiar in policy circles – these include occupation based property taxes such as higher 'top sliced' council tax bands and a 'mansion tax' (essentially an annual surcharge bill based on a percentage of the assessed market value of a home); as well as a proposals for higher rate residential property transaction taxes such as removing or restricting the current residential capital gains exemption for higher value properties as well as stamp duty reform.

Changes to existing taxes such as council tax, capital gains tax, stamp duty and inheritance tax are the simplest areas for Government to implement. The Budget could even present limiting residential capital gains tax relief as a form of "wealth tax".

Significant property tax changes might ordinarily be expected to be undertaken in a more buoyant housing market. Such reforms are also administratively challenging and risk distorting housing market activity, as has been seen over the years with stamp duty changes. As such, it remains to be seen how radical any such new proposals may be, how much additional revenue such taxes may raise and the impact on the housing market.