The Chancellor said she will boost defence spending by £2.2bn hours before she delivers the Spring Statement today — but the property industry will want to know how big a bite this has taken out of her plans to invest in housebuilding, a key part of the government’s growth plans.

Rachel Reeves said the rise in the defence budget from next month comes as the UK has to “move quickly in a changing world,” as the US continues to question the value of the NATO alliance.

The Chancellor will also seek to replace £10bn of headroom, in the Treasury’s day-to-day spending, since her October Budget which govern her fiscal rules, due to a rise in government borrowing costs, weak economic growth and stubborn inflation.

Reeves will get to her feet in the Commons this afternoon after the UK economy slowed in the second half of last year.

Quarterly growth was unchanged in the third quarter and up by 0.1% in the final three months of 2024. This followed growth of 0.8% and 0.4% in the first two quarters of 2024, respectively.

In the first two months of the year, the economy shrank by 0.1% in January and grew by 0.1% in February, although monthly measures are more volatile than quarterly readings.

But the mortgage sector will watch closely for signs that Reeves is committed to expanding home loans and building 1.5 million homes over the next five years.

Propertymark head of policy and campaigns Timothy Douglas says: “With housing playing a key part in the government’s plan for change, the Spring Statement must ensure government policy protects the delivery of more social and affordable housing and local authorities have the resources they need across planning, enforcement and infrastructure.

“Policymakers must also fully understand the need to reform housing benefits so they reflect real rental costs, and the government must continue to target resources to tackle the cladding crisis and improve building safety to help boost economic growth.”

Jeremy Leaf, north London estate agent and a former Rics residential chairman, points out that everyone from housebuilders, homebuyers and renters will watch to see what her statement offers them.

Leaf says: “The Chancellor’s options are limited and the Spring Statement is probably just as much about what she does as doesn’t do, as far as property is concerned.

“More than anything, we don’t want Rachel Reeves to compromise existing buyer and seller activity but do want her to further support growth where possible.

He points out: “Construction activity is also vital to keep prices and rents under control but takes political consensus and time. However, builders will only build at the rate they can sell and won’t even try to obtain planning unless schemes are perceived as imminently profitable.”

Leaf adds: “It shouldn’t be forgotten either that many landlords are doing the job of local authorities unable or unwilling to provide affordable homes with up to 25%, or over 1 million, of private rented sector tenants paying housing benefit.”

These are the key areas where the property will look for change:

Mortgages

The Financial Conduct Authority earlier this month said it would open consultations on making it easier for remortgagers to switch to a new lender and on home loan stress testing.

UK Finance and Nationwide this month called for an easing of existing loan-to-income limits for new residential mortgages at, or above, 4.5 times income, which are currently set at 15% across major lenders.

The industry will watch to see if the Chancellor has anything more to say on home loans, or, offers anything on the direction of travel and speed of current reviews.

Stamp duty

On 1 April, the stamp duty rate threshold will revert to September 2022 levels, before the Liz Truss Budget, falling to £125,000 from £250,000 for home movers, and to £300,000 from £425,000 for first-time buyers.

The industry has been lobbying for lower FTB thresholds to remain in place, and an extension for all homebuyers rushing to complete deals before the deadline falls in two weeks.

Saffron for Intermediaries head of business development Tony Hall says: “We’re hearing from brokers that transactions started as early as January may not complete in time.

“We urge the government to extend the deadline to support the estimated 75,000 homebuyers at risk of missing out and facing higher tax bills.”

Lifetime ISA

The savings industry has long argued that the Lifetime ISA needs reform.

They say the scheme’s 25% early withdrawal charge effectively acts as a 6.25% exit penalty on a consumer’s own savings.

Critics add that the product’s dual lifetime savings element is confusing and little users by consumers. They say the package should be stripped back and solely used as a way for FTBs to save for a home deposit.

However, the Chancellor may wait for the Treasury Committee, which is currently investigating whether LISAs are fit for purpose and is expected to report later this year, before acting.

Energy performance certificates   

The energy department launched a consultation in February, on how best to lift the 52% of private rented homes that fall below an energy performance certificate rating of C to that level, or above, by 2030.

It estimates average costs to landlords will range between £6,100 and £6,800 over the next five years.

Molo Finance chief commercial officer Mark Michaelides says buy-to-let owners will look for “any green initiatives to support energy performance certificate improvements”.

The Chancellor has stressed her desire to get away from presenting two Budgets a year, as has been the norm over the last decade.

But with a fragile economy to contend with and many calls on the public purse, her Spring Statement may feel like one in all but name.