Research has shown that on average women earn less and have lower levels of wealth than men. In most regions in the UK, women need higher multiples of income to buy their own home. This affordability gap means access to the property market is more difficult for women.
The economic crisis will not help. As UK households experience the biggest energy crisis of any country in western Europe, amid reports of the UK economy shrinking by 0.2% in Q3 2022, the Office for Budget Responsibility (OBR) has confirmed that we are in a recession.
For those trying to get on the property ladder for the first time, particularly women, there is an extra layer of financial pressure, with the harsh economic climate, rising interest rates and inflation driving up prices. Women already lagged behind men in property ownership before the pandemic, and the economic crisis will do nothing to turn this around.
In addition, chancellor Jeremy Hunt’s Autumn Statement outlined tax allowance freezes and some rate band reductions up to April 2028 to close the £55bn black hole in public spending, and austerity is very much on the economic agenda. There was support for the more vulnerable, but the income tax measures will bring many into the tax net due to fiscal drag, including single-income households that could also be hit by extra costs such as the high-income child benefit charge, making it even harder for first-time buyers to save.
The government’s October medium-term fiscal plan outlined a commitment to uphold stamp duty land tax (SDLT) relief, but there are some serious limitations to this tax measure. While it improves the financial position for homebuyers with limited spare income, including women, the pressure of higher interest rates and care costs (women tend to have more care responsibilities) means it won’t. The measure will only last until March 2025 and may increase property demand further against limited supply, so prices remain unaffordable, particularly in London and the South East.
Drastic interest rate rises
Furthermore, mortgage interest rates have risen drastically, hitting a 14-year high in October, adding another level of pressure. Rates have stabilised recently, but the era of very cheap mortgages is over, according to Knight Frank, which says SDLT cuts will be outweighed by mortgage interest rate rises.
Although the ‘Planning for the Future’ white paper and Levelling-up and Regeneration Bill offer hope of improving building capacity through some relaxation of greenbelt policy, greenbelt protections will remain, and it is being questioned whether it is now time to have a debate on easing some restrictions. This could help to increase the supply of housing at a time when demand cannot be met in urban areas and so remove barriers by building social and affordable housing.
Plans are also in motion to sell £1.5bn of government offices in London, and while this won’t address affordability issues directly, the industry will wait to see what this means for redevelopment and improving stock.
That said, annual UK house price growth slowed to 7.2% in October, from 9.5% in September, as prices dropped by 0.9% – the first monthly decline since July 2021. The OBR predicts a 9% drop in house prices by autumn 2024.
Although some may argue that the chancellor’s latest fiscal announcement has brought stability to the UK for the first time since September, at what cost to women and first-time buyers looking to get on the ladder?
Frozen and lowered tax thresholds will affect many taxpayers – even some on the national minimum wage – leaving the property affordability gap for women and those on lower incomes ever wider, as real disposable income shrinks.
Eugenia Campbell is a tax director at accounting firm RSM UK
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