"£39 billion sounds like a colossal figure until you spread it over a decade... It feels like a pilot scheme dressed up as a revolution." - yours truly on the most over-trumpeted underinvestment of a generation, benchmarked by a decade or more of choking the sector of any meaningful plan or contribution.
This week’s quote pertains to the deep dive, as ever, as I get stuck into updates on Commonhold and Leasehold Reform, Social Housing funding, Co-living “coming of age” in London and a look beyond the build-to-rent numbers in terms of delivery.
As the calendar advances through the Golden Quarter, our next Property Business Workshop is live and tickets are already selling. This is about structure, and exit - yours, and others. No exit plan? You go out one way or another. Things have changed, as well, with pensions being brought into the scope of your personal estate. What does this mean for SSAS - according to people that use them, but don’t sell them - an objective viewpoint. Book in on the next Property Business Workshop with myself and Rod Turner - Wednesday 22nd April - Central Manchester - https://bit.ly/pbwten10
Trumponomics kicks us off, as we continue to try and catch the waves that the Prez leaves behind as he moves towards the mid-terms like a bull in a china shop. Quite a week, as we were told that the UK’s involvement and presence in reconnaissance missions in/around Greenland was labelled “dangerous” by the guy who can “keep everyone safe”, presumably, as long as you don’t live in Minnesota.
In one of the least surprising headlines ever, Trump didn’t like Starmer’s visit to Beijing this week - the first for 8 years - and this was labelled “very dangerous” (creative he ain’t). The visit was broadly well received as helping to thaw relations between the two nations and working towards a “more sophisticated” trade approach. I mean the Donald really can’t be surprised that making it more expensive and difficult to trade with him pushes nations to shop elsewhere - can he? I guess he can - because he can do whatever he wants - but surely this is just rational behaviour, primarily driven by the White House and policy?
The Lib Dems alongside Chatham House research are pushing for the UK to establish an “Anti-Coercion Instrument” to protect themselves in the era of economic bullying, as it is becoming known (I don’t like what you say or do, so I move to tariffs or yank deals that were on the table, accordingly - a fair representation of what’s been going on). What would an ACI do? If coercion is found in a sudden trade move (perhaps one announced on a social media platform, for example), ministers could immediately impose retaliatory tariffs, block foreign investment, or exclude that country's companies from UK government contracts without needing lengthy parliamentary approval for each step. The point is that it makes the UK a “porcupine” and the bullies look elsewhere. Probably wouldn’t work - but you can see the logic.
On that subject, I’ve said in presentations I’ve given that the NATO point which Donald has been making for a decade or more is of course true (many countries have not paid their share) but also has an agenda (buy more defence stuff from the US, rather than spending your Government/people’s dollars on other things that the US is not benefiting from). The solution here is to do NO defence spending with US companies, and buy home-grown or European-grown, of course. Announcing such a play - and using the same tactics versus any other bully-boy manoeuvres.
Indeed, tariff fatigue is now officially a thing. 33% of UK firms exposed to the US are already making strategic shifts or undertaking contingency planning according to Chamber of Commerce data (what are the other 67% playing at, frankly?). The feedback? Like a lot of very subtle moves of capital - away from investment in routes that point to the US. This is the inevitable conclusion, of course, although no-one can say it out loud, for fear of upsetting the overgrown child.
21% of UK SMEs now rate US tariffs as their NUMBER ONE economic concern, ahead of domestic recruitment, or tax considerations, for example. Exposed small businesses are reporting an average 17% drop in sales, and a 30% average rise in the cost of imported components. Ouch.
Volatility continues while DT throws the kitchen sink at impressing his voter base, and it will do at least until the midterms swallow attention. Oh, and it is “partial shutdown” once again for the Government, a position which this administration seems to enjoy in order to achieve some of its objectives. Go figure.
Now I’ve compromised my chances of going to the USA once more for daring to speak, let’s get back to Chris Watkin and the relative calm of the UK real time property market. Week 3’s property stats show is out!
Chris goes Sunday to Sunday, so this was the week ending 18th January. We managed even more listings than in 2025 once more - just about - so far (96,541 versus 96,077). The glut of listings definitely looks back, at the moment - following on from Boxing day and record listings according to Rightmove, which have been lost in Chris’ real time stats remember because he doesn’t run the analysis over holiday weeks. The lag of listing before the budget is most certainly over - if we left 2025 and 2026 out, the average number of listings by this point in the year would be around 72,500 - we are about 33% ahead of that, so that’s seriously statistically significant.
What about reductions? 20,000+ price reductions in week 3 is the biggest number of reductions for any year in the past 10. The trends continue.
Having said that, the whole market continued with bigger numbers than average, as 24,581 homes went sold subject to contract. The week 3 average is 23.4k.
Net sales are in 3rd place over the past decade - behind 2021 and 2025, at the moment. Remember in 2025 there was still urgency and hope of beating the stamp duty deadline for deals agreed in the first half of January, for sure, and 2021 started like a rocket.
To start January there ended up being a 10-year+ record number of homes on the market, 613,882 thanks to this record Boxing day other than anything else - 2025 started with 605,088 OTM. One more stat - available rental properties in December 2025 in the UK - 285k, compared to 258k in December 2024, and 235k in December 2023. Supply is increasing again - a longer timeframe is needed to put all of that into context but if new rents are flat, or even down - which some are telling me they are - 10.5% more stock than the year before tells a story, of course.
Chris - things just feel “right” when we can see the real-time data that you share with us. Thanks for what you do! How about the Macroscope? We had the Bank of England Money and Credit Report which is always data-rich. We then also take a look at the Zoopla January 2026 House Price Index which came out this week. Another look north of Hadrian’s wall at the superior data that Scotland produces thanks to their landlord register, to see our best guess of what might be going on in England right now, and a steer for post-renters-rights implementation as well. And we still need to talk about the gilts and swaps, so that brings up the rear as always.
Mortgage approvals took a surprising drop to 61,000. The lowest since June 2024. I know - December should be quieter, right? The years before were not good yardsticks really; December 2022 was still smack bang in Truss recovery phase, 2023 was repair after a woeful year - 2024 was falsely inflated by the Stamp Duty “realignment” coming into play in April 2025. Above 60k is fine, though - and let’s not draw conclusions from one month’s data. What we CAN say is that we didn’t get the expected bounce from the budget certainty that we gained in late November.
Consumer credit also stayed calm, given that it was December. No massive over-extensions going on (at the macro level, anyway!). Mortgage lending grew at 3.4% year-on-year, a number that has “sustainable” written all over it. The effective interest paid on newly drawn mortgages dropped to 4.15% (on average) versus 3.92% as the average cost of outstanding debt - as the “great readjustment” continues, we are nearly at convergence (or 23 basis points out, anyway - and that gap closed 7 basis points just in December 2025). This year is the one that sees these meet as the 2021 5-year loans drop out of the figures as far as the cost of outstanding debt goes, and gets replaced with the 2026 debt which is cheaper than most of the debt over the past few years (but not much cheaper).
The average term deposit from December 2025 is earning 3.76% (accounts that restrict withdrawals) - the average “sight deposit” as they call it (think “instant access”) is getting a puny 1.75%.
Large businesses annual growth rate of loans was 7.7%, versus 2.2% for SMEs. SMEs are still just about repairing after shrinking lending massively since the “great repricing” of debt - and since there was a lot of “easy debt” around Covid, with bounceback loans, interruption loans, recovery loans, and all the rest of it.
The money supply grew 0.3%, which is a nice steady month…..a presentation and “fireside chat” which I was featured in this week at a national conference had a far more preeminent economist than I presenting - and he framed this nicely as the growth rate plus headline inflation. A 4.6% growth in the money supply (that’s December 2024 to December 2025) allows room for 2% inflation and 2.5% growth - or, in our world, 3.4% inflation and 1.2% growth (not quite the numbers that we’ve seen, but not far off/I’ve plugged in CPI and gone from there).
The Zoopla/Hometrack House Price Index, then. +1.2% year-on-year is their headline number, with a 9% drop in buyer demand. Don’t overanalyse the 9% - remember the incentive to beat the stamp duty deadline. They list 4% as the average mortgage rate for a 75% LTV mortgage - very close to the Bank of England’s reported 4.15% average drawdown rate for December 2025.
Richard Donnell’s quote - a man always worth listening to:
“Buyer demand has picked up at the start of the year as confidence returns following Budget uncertainty in late 2025. While market activity is improving, higher levels of supply mean pricing and presentation are more important than ever for sellers.”
The report points out that confidence has returned. There’s a lot of stock, but plenty being agreed, is what the numbers in the Watkin segment supported. There’s also an 8% spread between best-performing and worst-performing city - from -2.6% to +5.5% - I’ll leave you to guess where…..briefly.
“Discipline” is front and centre for sellers, “especially in Southern England”.
Zoopla has the North West gaining 3.5% in 2025, and London losing 0.7% (with the South East and South West both losing 0.1%).
Worthing was the Worthy Loser at -2.6% in 2025 on Zoopla numbers, with Burnley leading the pack at 5.5%. Rochdale, Blackburn, Liverpool and Wigan all printed above +4%. Despite there being plenty of stock at the nationwide level, homes for sale are down 7% in the North West. London has 14.2% more homes for sale than 12 months ago.
Zoopla also reports 1.2m transactions completed last year; smack on their prediction I believe (or at least within their range of 1.15m to 1.2m). I’d expect similar numbers this year. Zoopla cites the 20% more that a borrower can borrow compared to a year ago - the choke on this market seems to be the amount of stock, alongside the enhanced moving costs that are out there because of higher stamp duty, aside from anything else - to put the 20% into context, we need to know how much more money is needed for the average transaction today compared to 1 year ago……great insight in the Zoopla report as usual.
Scotland the brave, then? Well, not their landlords - the headline from the Housing Register of Landlords indicate that we lost 4,807 (2%) landlords in Scotland in 2025 (this is sometimes when they drop off the register, because their registration is up for renewal - so they might have stopped before 2025 but not told the register) - but we only lost 213 properties.
What does this mean? Clear evidence of consolidation. Fewer landlords, a few less properties. Smaller landlords selling to bigger landlords. I am stunned that they are paying the 8% additional LBTT (Scottish Stamp Duty) - but they must be. There you go! Short but sweet (and clear in its conclusions).
Onto the gilts and swaps. We opened at 3.94% and closed at 3.961% for the week on the 5-year gilt yield. A tiny gain. We flirted over that psychological 4% barrier a number of times, but never got past it for long enough. 2 basis points the wrong way.
The 30s gained a fair bit more. 5.211% to 5.289% is 7.8 basis points the wrong way. The yield curve got steeper. Ugh. The swaps also went the wrong way with the 5-year closing Friday at 3.693% and that discount from the gilt yield continues to be a fair bit narrower, at just under 27 basis points versus the 35-36 we saw so often over the past 12 months. Translation - 5.5% looks like the cheapest rate for any new products in the limited company mortgage market, with no arrangement fees.
A week to forget, then, really, on the gilts and swaps.
Moving to the deep dive - we had a policy-heavy week. Ground rents capped at £250? Zeroed after 40 years? Victory, the right decision, etc? We will find out! Then - social housing progress with money available at 0.1% interest? This is likely one part of the jigsaw - is it enough? There’s also a report on major co-living developments in London which I thought would be of interest as it really wasn’t on my radar, and we also get the chance to catch up on Build-to-rent and numbers from the end of 2025.
The Commonhold and Leasehold Reform bill. It’s complex. Over 500 pages of legislation and explanation. I’ve concentrated on the guide - translating it, in theory, into a mere 83 pages. Here’s the summary:
Theme 1: The End of the Leasehold Line - And The New 'Default'
The Summary: The government has explicitly positioned this draft Bill as the delivery of a manifesto commitment to dismantle the "feudal" leasehold system. The headline measure is a statutory ban on the granting of long residential leases for new flats. Once the new legal framework is operational, commonhold will become the mandatory default tenure for all new flats.
Exceptions to this ban will be limited to specific cases such as shared ownership leases or home finance plan leases (like Sharia-compliant finance). To enforce this, the Bill proposes a rigorous regime where trading standards authorities can issue financial penalties of up to £30,000 per breach. Furthermore, consumers who were mis-sold a leasehold flat in breach of the ban will have a statutory right to redress, allowing them to acquire the freehold commonhold unit at no additional cost. The government is currently consulting on the precise timing and transitional arrangements to minimise disruption to housing supply.
The Propenomix Perspective: I have been talking about the death of leasehold for years - usually with a pinch of salt - but this draft Bill suggests the government is finally looking to pull the plug. The language here is not subtle; they are calling the current system "exploitative" and "draconian". For developers, the message is clear: the model is changing, whether you like it or not.
My immediate concern is the transition. The government admits that commonhold has "failed to take off" since 2002, with fewer than 20 established in two decades. To jump from that standing start to a mandatory default is a massive structural shock. They are promising to listen to industry regarding the timing, but if they force this through before lenders and conveyancers are truly comfortable with the commonhold vehicle, we could see a significant air pocket in new build supply. The £30,000 fine per breach is a hefty stick to wave around , but the real killer for developers is the redress - if you sell a leasehold when you shouldn't, the buyer gets the freehold for free. That is a level of risk that will force compliance faster than any fine.
Theme 2: The Conversion Crusade - The 50% Threshold
The Summary: A critical component of the Bill is facilitating the conversion of existing leasehold blocks to commonhold. Historically, this required 100% unanimity among leaseholders and lenders - a threshold that proved practically impossible. The Bill slashes this requirement significantly, allowing conversion to proceed with the consent of just 50% of eligible leaseholders.
This creates a new category of resident: the "Non-Consenting Leaseholder" (NCL). If the 50% threshold is met, the conversion happens, and those who did not agree remain as leaseholders but with significantly altered rights. Their leases will be amended to align with the new Commonhold Community Statement (CCS). Crucially, NCLs will lose the statutory right to extend their lease; instead, their only option to secure their tenure will be to buy the freehold of their unit (converting to commonhold). The Bill also creates a mechanism to phase these leases out entirely over time - for instance, at the point of resale, the property must be sold as a commonhold unit.
The Propenomix Perspective: This is the most aggressive part of the legislation. Dropping the consent threshold from 100% to 50% is a game-changer. It effectively allows a simple majority to drag a building into a new legal tenure. While the government frames this as "helping" leaseholders, the treatment of the dissenters - the Non-Consenting Leaseholders - is severe.
If you vote against conversion, you don't just get to stay as you were. You are stripped of your right to extend your lease. That is a huge blow to the long-term value of a leasehold asset. You are essentially being squeezed into commonhold eventually, either when you sell or when your lease runs down. It creates a fascinating - and likely litigious - dynamic within blocks. You will have half the building running the show as commonhold members, and the other half as NCLs who have voting rights on the budget but technically answer to a "unit owner" (likely the former freeholder) who has been stripped of most powers. It sounds like a recipe for neighbour disputes that will make current service charge arguments look like a tea party.
Theme 3: The Assault on Income - Ground Rents and Forfeiture
The Summary: For existing leaseholders who do not convert, the Bill introduces sweeping financial reforms. It caps ground rents in existing leases at £250 per year, which will drop to a peppercorn (effectively zero) after 40 years. This measure does not require landlords to reimburse past payments, but it caps future liabilities significantly.
Simultaneously, the Bill abolishes the right of forfeiture. Currently, landlords can terminate a lease for breaches of contract, potentially allowing them to take possession of the asset. This will be replaced by a "fairer" lease enforcement scheme. Under the new system, landlords must apply to a court for a remedy, which could include an order for sale as a last resort, but ensures the leaseholder does not lose their equity over minor debts. The Bill also targets "estate rentcharges" on freehold estates, repealing the powers in the Law of Property Act 1925 that allowed rentcharge owners to take possession of properties for unpaid charges.
The Propenomix Perspective: If you are holding a portfolio of ground rents, this is the news you have been dreading. The £250 cap is a blunt instrument. While it spares the market the immediate shock of a total wipeout to zero (which was mooted previously), the 40-year sunset clause puts a definitive expiration date on the asset class. Valuations will have to be adjusted downwards immediately to reflect this capped and eventually terminating income stream.
The abolition of forfeiture is equally significant for the mechanics of investment. Forfeiture was the nuclear deterrent that ensured service charges and ground rents were paid. Without it, freeholders - and indeed Commonhold Associations - are reliant on the courts to enforce debts. While the Bill introduces an "order for sale" capability, anyone who has dealt with UK courts knows this will be slow and expensive. The shift of power here is palpable. It removes the leverage that kept the cash flow steady in many blocks. Lenders will love the removal of forfeiture risk, but for those managing blocks, cash flow management just got a lot harder.
What’s the cost? It is saving £12.7 billion for the leaseholders - which, from a mathematical identity perspective, means it is costing freeholders the same amount. This is an improvement on the £30bn we were told the bill would be by abolishing ground rent - and the data is very weak on who owns what or how the pie chart breaks down in terms of organisations. It seems likely private equity owns perhaps 50% of ground rents, and pension funds are limited to 15-20% - based on extrapolation of how much M&G own and the sort of writedown they’ve been talking about since the announcement. So - private capital and their returns are taking the brunt of these proposals. Cue long and expensive court battles, of course - it is the duty of these funds to protect their financial interests, of course. Loss to pensioners - £2.5bn or so, less than the loss created by Liz Truss and Kwasi Kwarteng in the mini-meltdown budget of 2022 in one day.
Theme 4: The Reality of Management - Insolvency and Control
The Summary: The Bill places the "Commonhold Community Statement" (CCS) at the heart of building management, serving as the rulebook for all unit owners. It mandates that Commonhold Associations (CAs) must legally agree on an annual budget through a member vote. If a budget cannot be agreed, the previous year's budget rolls over.
To protect financial stability, the Bill makes reserve funds mandatory and introduces powers for CAs to borrow money or, in emergencies, sell off parts of the common estate (like a car park) to raise funds. It also addresses the risk of CA insolvency, providing a process for a "successor association" to take over. Crucially, the Bill allows for "sections" within a commonhold to separate costs and decision-making in mixed-use developments, ensuring commercial units and residential flats do not conflict over irrelevant costs.
The Propenomix Perspective: This is where the rubber meets the road - and where it might skid. The government is trying to make commonhold robust enough for complex, mixed-use sites by introducing "sections", which is a sensible copy of the strata title systems seen in Australia. But the reliance on members voting for budgets fills me with dread.
We all know the apathy that plagues Residents' Management Companies (RMCs). Now imagine that apathy with statutory teeth. If you can't get a budget voted through, you roll over last year's figures - which, in an inflationary environment with rising insurance and energy costs, is a fast track to a deficit. The Bill allows CAs to borrow and charge assets, which is flexible, but also dangerous in the hands of amateur directors. They are professionalising the structure - allowing professional directors to be appointed if no owners step up - but that costs money. The dream of "taking back control" often hits the hard reality that running a large building is a thankless, expensive, and legally complex job. The Bill creates the framework, but it can't legislate for competence.
The solution is most certainly imperfect - and in practice, being involved in commonholds for cheaper units in Scotland for some years, the workings of these buildings at the cheaper value end is utterly dysfunctional. Is it the least worst system? Maybe - but only maybe.
Next up - we were due an update on the much promoted £39bn for social and affordable housing pledged over the next decade. It was with us this week. Was it great news?
Theme 1: The £39bn Supply Stimulus and Low-Interest Loans
The Summary: The government has confirmed the parameters for its flagship 10-year Social and Affordable Homes Programme (SAHP), backed by £39 billion in grant funding. The programme aims to deliver approximately 300,000 social and affordable homes over its lifetime, with a hard target of at least 60% designated for Social Rent. Bidding for this new pot opens in February 2026, with prospectuses for London and the rest of England already published.
To complement the grant funding, the government is introducing a £2.5 billion low-interest loan scheme available between 2026 and 2030. These loans are specifically for Private Registered Providers (including For-Profits) and come with a highly favourable interest rate of just 0.1% over a 25-year duration. The loans are unsecured, subordinated, and designed to sit at the corporate level, intended to unlock additional homes over and above those delivered via grant funding alone.
The Propenomix Perspective: Let’s be honest - £39 billion sounds like a colossal figure until you spread it over a decade and divide it by the construction realities of 2026. They are targeting 30,000 homes a year. While better than a poke in the eye, it is hardly the "transformational" supply shock the market desperately needs.
However, the real spice here is the debt piece. A 0.1% interest rate on unsecured, subordinated corporate debt is absolutely free money in today’s rate environment. It is a clever financial engineering lever - effectively an equity injection in all but name - designed to shore up balance sheets that are currently groaning under the weight of remediation costs. But look at the fine print: the total pot is only £2.5 billion. In the world of institutional capital, that is a rounding error. It feels like a pilot scheme dressed up as a revolution. If they really want to move the needle, they will need to add a zero to that fund. For now, it is a nice sweetener for the For-Profits, but it won’t fix the systemic viability gap on its own.
Theme 2: Rent Convergence and the 10-Year Settlement
The Summary: To provide the sector with long-term financial certainty, the government has locked in a 10-year rent settlement allowing social landlords to raise rents annually by CPI + 1%. Crucially, the government has also confirmed the reintroduction of "rent convergence" to address the disparity between actual rents and formula rents.
Starting from 1 April 2027, landlords can increase rents on properties that are currently "below formula" by an additional £1 per week over and above the standard CPI + 1% limit. From 1 April 2028, this cap rises to an additional £2 per week until the formula rent level is reached. The government states this gradual approach strikes a balance between protecting tenants - roughly two-thirds of whom receive housing support - and rebuilding the financial capacity of providers to invest in new and existing stock.
The Propenomix Perspective: Finally, some adult thinking in the room. The sector has been screaming for a return to convergence ever since the disastrous rent cuts of the mid-2010s decimated business plans. The fact that we have a confirmed 10-year horizon of CPI + 1% is the bedrock that Chief Financial Officers need to go to the bond markets with a straight face. This is a fix for a George Osborne ideological cock-up.
The convergence mechanism is a bit of a slow burn - waiting until 2027 for the extra pound and 2028 for the extra two pounds feels overly cautious given the immediate cash flow pressures. However, it is a clear signal that the government understands you cannot regulate for higher standards (see below) without allowing the revenue to pay for it. It acknowledges that artificially suppressing rents below formula was a false economy that starved the beast. This won't fix the balance sheets overnight, but it stops the bleeding. It allows valuations to creep back up, which in turn unlocks borrowing capacity. It is boring, technical, and absolutely vital.
Theme 3: The S106 Emergency Rescue
The Summary: The government has identified a critical failure in the Section 106 (S106) market, noting that the negotiation process has become "synonymous with inefficiency and delay" and that uncontracted units are stalling development. In response, they have launched an "emergency, time-limited approach" for uncontracted S106 units where developers can prove no Registered Provider (RP) is willing to purchase them.
This roadmap includes a requirement for all such homes to be registered on Homes England’s Clearing Service to gauge the scale of the problem. Furthermore, up to 10% of the new £2.5 billion low-interest loan scheme will be specifically allocated to support the acquisition of S106 homes. The government is also exploring a greater role in "crowding in" private investment to clear this backlog and prevent the development pipeline from contracting sharply.
The Propenomix Perspective: This is the most alarming part of the update - and the most telling. When the government announces an "emergency" measure for S106, they are admitting the primary engine of affordable housing delivery has seized up.
Here is the reality: RPs have stopped buying S106 units because they are too busy spending their cash on fixing damp, mould, and cladding on their existing stock. Developers are left holding "affordable" units they cannot sell, which means they cannot trigger the next phase of their private build. It is a constipation of the entire housing delivery system.
The "Clearing Service" sounds like a polite way of creating a distressed asset register. And allocating 10% of the loan fund (£250m) to this is a drop in the ocean. If RPs won't buy these units, we might see a forced tenure flip or a massive entry of For-Profit providers picking up these assets at a discount. If you are a developer sitting on uncontracted S106 stock, the message is clear: the cavalry isn't coming with a big chequebook, just a small loan and a new database. “Clearing” is the right word, though.
Theme 4: The Heavy Hand of Regulation (DHS & Energy)
The Summary: The government has confirmed that a new Decent Homes Standard (DHS) will apply to both social and private rental tenures from 2035. The updated standard prioritises safety, decency, and warmth, with specific requirements such as child-resistant window restrictors and strict timelines for damp and mould remediation under Awaab's Law.
On energy efficiency, the Minimum Energy Efficiency Standards (MEES) have been finalised. Social homes must reach EPC Band C against one metric by 1 April 2030, and against a second metric by 1 April 2039. A "spend exemption" cap of £10,000 has been set. The government has decided against mandatory floor coverings or enhanced security regulations to balance cost implications with supply ambitions.
The Propenomix Perspective: The regulatory ratchet turns again. The headline here isn't just the standards themselves - it is the inclusion of the private rented sector (PRS) in the new DHS from 2035. That is a long lead time, but it signals the direction of travel: a unified standard for all rental property.
For social landlords, the "spend exemption" of £10k for energy upgrades is the key number. It puts a ceiling on the liability for the worst-performing stock, which is a mercy. However, the operational weight of this is immense. "Thermal comfort" and "reasonable state of repair" are subjective terms that will inevitably lead to litigation.
The government has blinked on floor coverings, though. They realised that mandating carpets would bankrupt the sector and kill supply stone dead. It is a grim trade-off - acknowledging tenants are too poor to buy carpets but admitting landlords are too broke to provide them. It sums up the state of the market perfectly: high standards, low cash, and a desperate scramble to keep the lights on.
Overall, this is progress - particularly on the “cheap loan” front. It’s been said for some time that the numbers don’t stack up - this is an attempt to fix that, and to use the private sector to do so. That, overall, is the only call - whether those with a political interest feel that it is “right” or not.
The Lichfields report on Co-Living is up next and the teasers: “Twenty-six major co-living applications have been submitted in 2025, totalling over 10,000 co-living homes” and “Schemes vary in size from c.100 to over 800 units” had really caught my eye.
Theme 1: The Mainstream Pivot - From Niche to Masterplan
The Summary: The data suggests that 2025 was a watershed year for the co-living sector, marking its transition from a fringe asset class to a central pillar of London’s housing supply. According to Lichfields, twenty-six major co-living applications were submitted in 2025 alone, representing a pipeline of over 10,000 new homes. To put the speed of this acceleration into context, more than 40% of the total number of co-living applications submitted in London since 2018 have landed on planning desks in just the last 18 months.
Crucially, the scale of these developments is evolving. While schemes still vary from roughly 100 to over 800 units, co-living is now being explicitly written into the masterplans of London’s most significant regeneration projects. Major developments such as Earls Court and Barking Riverside now feature dedicated co-living elements, with Earls Court alone allocating 1,000 units to the tenure. This integration signals that the sector is no longer viewed as an isolated product but as a necessary component of mixed-tenure delivery.
The Propenomix Perspective: Let’s be honest about what is driving this "coming of age". It isn’t just a sudden cultural shift where everyone woke up and decided they wanted to live in 21sqm studios; it is a reaction to the absolute paralysis in the conventional market. The report notes that conventional housing starts in London sat at a pitiful 5% of housing targets for the first nine months of 2025. That is not a slowdown - that is a cardiac arrest.
Developers are not pivoting to co-living just because they love the community vibe. They are doing it because the numbers for traditional Build-to-Rent (BTR) and Build-to-Sell are currently strangled by viability gaps, construction costs, and the cost of debt. Co-living offers a density play that conventional housing cannot match. When you can squeeze 1,000 units into a footprint that might typically take 400 flats, the land value calculation looks very different.
The inclusion of co-living in Earls Court is the real headline here. When the "big boys" of regeneration start baking this asset class into their masterplans, it stops being a speculative punt and becomes an institutional staple. It is a hedge against the stagnant sales market - a cash-flow heavy asset that keeps the site active while they wait for the conventional sales market to find its floor.
I’ve spoken for years about how minimum space standards are - as they are set - a luxury that cannot be afforded, and - in that way that markets work - because there isn’t an “official” way around that, the water finds a way to run downhill and get to the result somehow. Within the rules, by changing definitions and offerings.
Theme 2: The Geographic and Regulatory Sprawl
The Summary: The footprint of co-living is expanding significantly beyond its initial strongholds. Lichfields reports that over 75% of London’s local authorities have now received a co-living application, a sharp rise from just 50% in mid-2024. While Inner London still accounts for a slight majority (55%) of recent applications, the split between Inner and Outer London is becoming increasingly balanced.
As the geography widens, the planning environment is becoming more sophisticated, particularly regarding affordable housing. Historically, co-living schemes relied heavily on cash-in-lieu payments to satisfy affordable housing policies. However, there is a distinct shift toward on-site provision. Of the applications submitted since July 2024 that committed to an affordable housing approach, nearly half (nine out of twenty) proposed on-site delivery, typically in the form of conventional C3 affordable homes. This contrasts with the 40% of schemes that opted for a cash payment.
The Propenomix Perspective: I have always said that planning policy is a lagging indicator, but in this case, the boroughs are catching up fast. The fact that three-quarters of London councils are now processing these applications tells me the "fear of the unknown" is dissipating. Planners are no longer looking at these schemes like they are alien spaceships landing in Zone 4.
The shift to on-site affordable housing is the critical mechanic to watch here. For years, developers loved co-living because the "sui generis" classification allowed them to write a cheque for affordable housing rather than actually building it on-site, which simplified management and floorplates. Now, councils are getting wise to this and demanding actual units.
This creates a fascinating management headache - and opportunity. You are now looking at assets that are effectively hybrids: a high-density co-living block sitting on top of, or next to, a standard C3 affordable housing block. It complicates the exit - who buys that mixed bag? - but it smooths the planning process. If offering on-site affordable units is the tax you have to pay to unlock the density of the co-living element, most developers will - begrudgingly - pay it. It is a trade-off: higher operational complexity for planning certainty.
Theme 3: The Product Metrics - Viability vs. Livability
The Summary: As the sector matures, the physical product is finding a standardized equilibrium. The average co-living unit size has crept up to 21sqm, with some schemes offering a mix of sizes ranging from 18sqm up to the policy maximum of 27sqm. This slight increase aims to cater to different market segments within a single building.
Conversely, the provision of amenity space is tightening. The average internal communal space has dropped to 3.5sqm per unit, down from 5.5sqm in previous years. This reduction aligns with the adopted London Plan Guidance (LPG), which introduced a tiered approach and encouraged flexibility. The focus has shifted from a blanket quantitative standard (e.g., 5sqm per person) to "qualitatively good design outcomes," allowing developers to provide less space provided it is high-quality and well-configured.
The Propenomix Perspective: This is the classic "value engineering" phase of a mature asset class. In the early days, developers threw in cinemas, bowling alleys, and vast lounges to prove the concept and justify the rent. Now, they have the data on what residents actually use. It turns out, you don't need 5.5sqm of empty lounge space per person if everyone is just sitting in their rooms on TikTok or working in a single co-working hub.
Reducing the amenity requirement to 3.5sqm is a massive win for viability. That is 2sqm per unit of "wasted" (from the developer perspective) non-revenue generating space that can either be removed to lower construction costs or converted into lettable area.
However, the increase in unit size to 21sqm is the necessary counterbalance. You cannot squeeze people into 16sqm boxes and simultaneously take away their breakout space without risking a revolt - or worse, a void period. The move to a "tiered" amenity approach shows that the GLA is finally applying some common sense, moving away from rigid spreadsheets to looking at how buildings actually function. It allows developers to build "leaner" buildings, which, given the current cost of debt, is the only way many of these schemes stack up.
All in all, this is a positive move - and also an inevitable market reaction to aggressive inflation, increased viability issues and all in the face of continued demand to move to London.
Last up, this week, the British Property Federation’s report prepared by Savills on build-to-rent for Q4 2025. The numbers thrown around on the surface seem very good in the headlines recently - but is that the whole story?
Theme 1: The Delivery Lag - Feasting Today, Fasting Tomorrow
The Summary: The headline figures from the Q4 2025 BPF report paint a picture of a sector that appears, at first glance, to be booming. The total number of completed Build-to-Rent (BTR) units has surged past the 146,700 mark, representing a robust 13% growth in completed stock over the past 12 months. This delivery drive was particularly strong in the first half of 2025. However, this abundance of ribbon-cutting masks a concerning underlying trend: the sector is emptying its pipeline faster than it can refill it. For eight consecutive quarters, annual completions have outpaced starts. Consequently, the number of homes actually under construction has contracted sharply, falling by 15% compared to Q4 2024. In the last 12 months alone, total starts plummeted by 45% to just 8,676 units - a figure that is half the average volume seen between 2017 and 2019.
The Propenomix Perspective: This is the classic "lag effect" playing out in real - time. We are currently celebrating the completion of schemes that were funded and contracted when debt was cheap and construction costs hadn't yet gone stratospheric. The 13% jump in completions is excellent news for tenants moving in today, but for the market in 2027 and 2028? It is a disaster in slow motion.
When you see starts down 50% from their pre-pandemic average, you are looking at a massive supply air pocket hitting the market in about 24 months. The viability equations simply haven't stacked up for developers recently. With gilt yields where they have been and SONIA swap rates stubbornly refusing to plummet, the cost of debt has strangled new projects in the crib. The data tells us we are eating our seed corn; we are delivering stock, but we aren't replacing it. If you think the rental supply crisis is bad now, just wait until this collapse in starts filters through to the lettings market.
Theme 2: The Capital’s Construction Collapse
The Summary: While the slowdown in construction is a national phenomenon, the data reveals a stark geographical divide, with London bearing the brunt of the contraction. The number of units under construction in the capital has dropped by a staggering 32% year - on - year, falling to 12,802 homes. In contrast, the regions saw a much milder contraction of 7%. The figures for new starts in London are even more alarming. Throughout the entirety of 2025, there were only 613 starts in London. This represents an 80% collapse compared to the 3,105 starts recorded in 2024. While the regional markets also slowed, recording 8,063 starts (a 37% decline), the activity outside the M25 completely dwarfs the capital.
The Propenomix Perspective: Let that number sink in for a moment: 613 starts. In London. A global city with a population pushing nine million people managed to start construction on barely 600 institutional rental homes in a year. That is not a slowdown; that is a cessation of vital signs.
This is what happens when you combine aggressive viability challenges with a political environment that often feels hostile to development. The "London Premium" has become a "London Penalty." Construction costs in the capital are eye - watering, and when you layer on the planning friction, investors are simply voting with their wallets and heading north. The regions are still seeing some activity - largely because the yield on cost actually makes sense in places like Manchester or Leeds compared to the razor - thin margins in Zone 2. If I were holding London residential assets right now, I would be looking at these supply figures and rubbing my hands. With practically zero new stock entering the pipeline, rental values in London have no trajectory but upwards.
Theme 3: Planning Optimism vs. Application Reality
The Summary: The report offers a glimmer of hope within the planning data, though it comes with caveats. The number of homes with detailed planning permission has risen to 67,307 - a 17% increase compared to Q4 2024. This theoretically boosts the potential for future starts. However, the top of the funnel is narrowing significantly. The number of new detailed applications submitted has fallen by 21% quarter-on-quarter, and total applications over the year are down by 36%. While the total pipeline (including completions, construction, and planning) stands at nearly 299,000 homes, the flow of new schemes entering the system is clearly being throttled.
The Propenomix Perspective: Beware the "detailed permission" metric. It is the fool's gold of property statistics. A consent is not a building; it is a piece of paper that increases land value. In a market where exit yields have softened, many of those 67,000 consented units will sit in a spreadsheet rather than turning into bricks and mortar. They are "oven-ready" in a kitchen where nobody can afford to turn the gas on. Let’s not forget those nearly 300,000 units permitted but not yet built, just in London, as reported on late last year.
The more telling stat is the 36% drop in applications. This shows that developers aren't even bothering to roll the dice on planning right now. The risk capital required to get a scheme to the application stage is expensive, and confidence is low. We are seeing a "wait and see" approach ossify into a "do nothing" strategy. Unless we see a material shift in the planning environment or the cost of capital, that pipeline is going to run dry very quickly.
Theme 4: The Single Family Silver Lining
The Summary: Amidst the gloom of falling starts, the composition of the sector is slowly shifting. While multi-family apartments still dominate with 87% of the pipeline, Single Family Housing (SFH) now accounts for 13% of the sector, totaling over 39,000 units. The BPF report notes that SFH continues to expand into new markets across the UK. This sub-sector is less reliant on the high density, capital intensive city centre towers that are currently struggling for viability. The data suggests that while the overall pie is growing slowly, the slice allocated to suburban housing models is becoming increasingly significant in the broader mix.
The Propenomix Perspective: This is the smartest play on the board right now. The institutional move into suburban housing is the only part of this report that feels like it has genuine momentum rather than just inertia. Why? Because it bypasses the cladding scandals, the fire safety retrofit nightmares, and the complex engineering costs of 40-storey towers.
You can build a row of houses in the Midlands faster, cheaper, and with less planning grief than a block of flats in Bermondsey. Plus, the tenant demographic - families looking for stability and willing to stay for three or four years - is exactly the kind of sticky income stream pension funds crave. The 13% share is just the start. As the London apartment market remains paralyzed by costs, expect SFH to eat a much larger chunk of the investment allocation in 2026. It is the defensive play that actually makes aggressive sense.
You have to ask, though. Where are the yields at? I must confess I both understand, and don’t understand it. Let’s do a quick breakdown. We SHOULD invest in property for total returns, although smoke-selling gurus tell us to “focus on cashflow so we can sack the boss”. The correct approach is no cashflow, no solvency and no business - sure - but HOW you grow your pot (and what you do, what value you add, versus the value of time and capital appreciation, is ALL important). When you don’t have “enough” - if you have a number which makes you want to stop, retire or whatever (a mindset I don’t identify with, because I don’t think it is helpful - it implies you aren’t enjoying what you are doing and are only doing it for money, in which case you will never be happy or satisfied anyway) - you are constantly chasing market-beating returns.
When you DO have enough, or are allocating funds for other people (i.e. you are a fund manager, investment manager, institution - something like that) - then you are faced with a completely different problem. You don’t WANT all the capital out of a deal, necessarily, because then you will still need to deploy it again, and again. You can be patient, rather than always in a hurry. You accept lower returns - far lower - because you aren’t hustling, trying to build a smaller pot into a bigger one. You are trying to preserve a bigger pot for future generations. You are more concerned with return OF investment than return ON investment.
This is the difference between the BRR hustlers (of which I still consider myself one, absolutely) and the capital allocators. What does this mean, and how does it translate to build-to-rent? Well, the developers and the funds can accept lower returns - returns that don’t even work in today’s debt environment for those of us who use leverage. How? The expectation is that TOTAL returns do provide enough to make it worthwhile deploying the capital. Cashflow is needed if you have a pension fund, for example, and residential property can provide inflation protection, cashflow, and safety/low volatility.
So I might only get a 3 to 4 per cent return on the capital in the now, but with a 2.5% capital growth forecast, that 6.5% might well be enough for me to invest. My cashflow is ALSO growing at 2.5% a year (let’s say) and so the best comparison is to an index-linked bond, rather than a fixed coupon bond. So if the index linked bonds are returning a real 1% (on top of inflation, which has been roughly the number for some time now) and my build-to-rent returns let’s say even 2.5% net after OpEx costs, that’s a 1.5% premium. On a billion pounds - I probably don’t need to tell you - that’s worth having.
Nothing for us to get excited about - we want our cashflow to cover debt, opex and margin as well - and the capital growth to be raw profit, really. That’s how the culture of the business model has expanded since 2009 and the advent of cheap money (I say that because beforehand, particularly in London, in a time of screaming capital growth, people were quite willing to be in negative cashflow each month in order to have access to that capital growth - and lenders facilitated it, which was all brought to an end in the Mortgage Market Review and resulting directive, after credit had completely dried up anyway following the Great Financial Crisis).
But that’s how build to rent works for some others, just not for us. To an extent. I’m not saying you can’t convert buildings to hold for the long term - I’ve absolutely done that - but that you need to understand there are very different metrics for capital allocators versus individual investors/those of us building a first-generation property investment company. Food for thought I hope!
So - with my head still buzzing after our amazing Property Business Workshop last week in London, tickets for the next one are now live. Firstly - after much demand and many DMs, we go where the action is at the moment - Manchester! This is a workshop in huge demand, as we talk about exits. We cover tax, risk, deal structuring and exit options - not just for you, but for those who you will inevitably be dealing with to buy assets, portfolios, companies and the likes from. Can you help with their exit? I have, over the years, often because they have no real formal plan of their own - and added massive value, getting deals over the line. Have you got children or are you planning to leave a legacy? What does your plan look like? Do the kids know about it…….they often don’t, and - spoiler alert - they often don’t want to play ball either!
As always we have real life case studies about our own experiences, and close with our “no-holds-barred” Q+A. Anything individual to consider? Get a VIP ticket and join us for dinner, in a smaller setting with an opportunity to discuss any specific roadblocks or issues in your property business at the moment. Our VIP dinner was absolutely incredible this week, and got some superb feedback - the upgrade is well worth it. Book your SUPER EARLY BIRD tickets for Wednesday 22nd April, Central Manchester at: https://bit.ly/pbwten10
Above all - please remember to Keep Calm, ALWAYS listen to or read the Supplement, and Carry On. There will be opportunities abound this year and towards 2030 and beyond - the landscape has been set for a surefire bull run. Capital growth looks set to remain slow(ish) at the moment, although if you are in the right part of the UK, you will be well looked after by the combination of that plus inflation, the big bull run needs some runway first (although let’s see what the FCA and PRA do around easing lending requirements again) - but let’s have an amazing Golden Quarter together, it is a case of “here we go” in my opinion.