"There are no solutions. There are only trade-offs." - Thomas Sowell, Economist, Philosopher, Historian.
This week’s quote pertains to the deep dive, as ever, as we get stuck into a number of reports including ideas on how to fix housing supply and retrofit issues.
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 - www.tinyurl.com/pbwten
Trumponomics - at the time of writing, we know that the US have supported what’s being called a pre-emptive strike on Iran. This is a moving scenario of course and when I hit publish, there’s no way this can be completely up to date. A week ago I said that Mr Trump had suggested that Iran have “10-days-ish” to row back on their nuclear programme (I know this might be confusing, since it wasn’t that long ago that a quick, surgical strike completely destroyed their capability and definitely didn’t just set it back for a few months, according to White House Comms at the time) - the line is that this is crucial, and that Israel have acted in concert with the USA. The explicit statement back in June 2025 was that the key Iranian uranium enrichment facilities had been “completely and totally obliterated” - whereas you might remember the intelligence community saying that this was more like 1-2 years of setbacks and possibly only a few months. The reality is that the centrifuges were largely left intact and Iran’s existing stockpile of highly enriched uranium (over 400kg) was still in place - as was the knowledge gained thus far.
Perhaps not surprising - a massive military build-up in the area, the removal of diplomatic staff from Iran by the UK amongst others - it certainly seems the writing was on the wall. The reality of the June attack is that it severed all diplomatic ties - as you would expect - and so the US have been flying blind, and they don’t like flying blind. The UK’s status as the “Calm Ally”, the chosen Starmer course of action, looks very problematic at this point, although the UK hasn’t been directly involved.
Economics-wise, what does this mean? Well, oil price and energy uncertainty, of course - there’s an inevitable move upwards in the oil price that’s coming. Israel is currently on lockdown based on a special state of emergency. Tensions are incredibly high. This looks as serious as it has been over the past few years, in a week where we reached the 4th “anniversary” (I dislike that term in these situations, since anniversaries normally mean something to be celebrated) of the Ukraine/Russia war. The reversal in the oil price that had helped bring inflation downwards will now be re-reversed and that might spoil the 2% inflation plans for April as far as the Bank of England was seeing it. The immediate futures market moves look like about 3% as I am writing.
What will Iran’s retaliation look like - you may well be watching it on a news outlet as you read this in real time. Is regime change on the cards and will the Western justification largely be the recent massacre that’s occurred in the protests in Iran in recent months? Most likely. I will, as usual, avoid taking a position and stick to the facts, and the consequences that are of most interest to those who choose the Supplement, week in, week out.
As a close to this section, it would be remiss not to note the longest ever State of the Union address from the Prez, at a record 108 minutes. Booming economy (so we were told) - but I must say I remain a big fan of Boosterism, exactly the opposite of what the Labour Party have delivered in the UK which has led to a very high savings rate, which has in turn damaged economic growth. How great was Venezuela and what’s been done there? Great, whilst marking his own homework. Iran was the only subject of note when it came to immediate foreign policy, and now we know why.
Back we scurry to the safety of the UK real-time property market. Chris Watkin’s analysis/roundup of week 7 of the UK Property Market. Chris “runs” Sunday to Sunday, so this was the week ending 22nd February. Once again we managed even more listings than in 2025 for yet another week - just about - so far (243k on the market so far is 1% above 2025 and 10% ahead of 2024, and 20% ahead of the 2017-19 average). The glut of listings is persisting - how much longer can we blame the budget for, in terms of disrupting the supply pipeline? What we know is that there’s extra stock on the market - it must be landlord disposals - but we don’t know exactly who is buying them, although first time buyers are especially active and there’s only so many houses, of course……..listings are 10% higher, week-on-week, than the historical averages (at the moment).
Gross sales are at 167k SSTC YTD, 12% higher than 2024 but 6% lower than 2025. The lack of that 31st March deadline, the urgency, and the time pressure will likely wash out by the time we get to the end of H1 of this year - because we know that last year’s figures had a peak and then a trough, as you always do around a stamp duty change/hike. The reason why pricing is sideways is because there is just so much supply, but transaction numbers still look very healthy indeed. Functional. Prices dropping in real terms (after inflation). Affordability improving. Everyone is happy (although those of us who benefit significantly from capital growth would mostly prefer it was faster, of course!).
Net sales are also 12% ahead of 2024, at 129k. 17% ahead of the 2017-19 market, and 29% ahead of 2023 which as we know was “limp lettuce” territory all year. 4% lower than 2025, though, with reference to the above caveats.
To start February there ended up being a 10-year+ record number of homes on the market (for a February, to be clear - we haven’t yet ascended or beaten the peaks set in 2025) - 663k thanks to this record Boxing day and solid January - 2025 Feb 1st saw 660k OTM, so it is 0.5% above that - a hair’s breadth.
Sales pipelines are, however, a few percent below where they were 12 months ago. At the end of Jan 2026 agents had 422,067 properties sold subject to contract - that compares to 433,030 at end Jan 2025, 353,395 at end Jan 2024, and 459,094 at end Jan 2021.
Reductions dipped under 20k - 19.8k for the week, 12.2% of stock was reduced in January, compared to the 2025 average of 12.8% (and the longer average of 10.74%). The fall-through rate is nice and low at the moment; 20.2% in week 7, (longer-term average 24.2% - all far too high of course, but all numbers have to be looked at in context of the “norm”).
January ‘26 saw sales agreed averaging £340.73, Only 0.63% ahead of a year ago. However, I do wonder just how much the cheaper stock selling much more is harming this average and this is why there’s some divergence between more recent figures and the ONS. Let’s see what filters through when we get there. This number is 16% ahead of 5 years ago - January 2021 was really accelerating very fast in terms of pricing and a huge slice of that 16% happened in just one year. We will keep monitoring. Exchanged prices were well above this for the month - £348.13 per foot, which is the highest number on record. Again, is there distortion here because these were deals agreed after the 2025 budget? It wouldn’t seem so, but you know we don’t make decisions based on one month’s data, we just keep abreast of it. That as a leading indicator might suggest prices breaking some ground as we get to the middle of the year, but I’d prefer a few months of data to just the one!
Chris - this is my weekly appreciation paragraph. Thanks for what you do! If you want some help positioning yourself as a local market expert - as an estate agent or any form of property professional - give Chris a shout! Either way give his channel www.youtube.com/@christopherwatkin a follow and some love, please!
In opposition to “meat week”, there’s a lot less macro this week - but we get to look at the UK Private Rents and House Prices report from the ONS, and I’ve squeezed Zoopla’s House Price Index in there as well; the statutory homelessness stats were out and they always need scrutiny; I’ll also take a look at the Consumer Confidence index from GfK which I’ve not covered for some months (mostly because there hasn’t been any!) - let’s check in and see how that’s going, since I’m always going on about how low confidence is and how little the public is inspired by our current tenants in 10/11 Downing Street (temporary accommodation, of course). Then - you know where we end up - the gilts and the swaps.
Private Rents and House Prices - rents up 3.5% on the 12 months to January 2026, we are told (remember, the ONS is basically the only major reporter of stats who uses existing rents in their figures, and indeed their figures are around 77% or so existing rents and 23% or so new tenancies). Still trending downwards, and coming back to the mean - sustainable, good news all round. This broke back, regionally, to 8% in the North East and 1.1% in London - quite a range. Northern Ireland rents have calmed down as much as they have in several years, to hit 5.6% versus Wales’ 5.8%, the first time another of the home nations has surpassed NI for some years.
How about the House Prices - well, this was the time to get the official figure for 2025…..drum roll. I’d said 3.75% at the start of the year - but I have since said I underestimated the stamp duty drag on the market (and also the drag that the poor performance that London and the South East put in) - those are my excuses anyway, but remember most forecasters never even mention it (those with new hair who live in tax havens just pretend they forecasted everything accurately, which is a next level move - if you know you know). The print, instead, was 2.4% (this is subject to revision, of course) - considerably better than Nationwide and Halifax, as I said it would be, and indeed outside of my adjusted bearish range of 1.5% - 2% as we approached the end of the year. “Acceptable”, below inflation, sustainable - pick your adjective. The rate in England was 1.7%, but Wales and Scotland printed 5% and 4.9% respectively (the Northern Ireland figures take a little longer).
The North East and the North West had an arm-wrestle for the winning-most region in England, with the NE winning by 0.1% (4.6% vs 4.5%). Then the midlands, then the south - the same pattern that we’ve been observing for a couple of years now. The South east printed a flat 0.0%, and London -1%. What we see as a rule is that a lot of transactions just don’t take place as people give up and wait for a better market - this always depends on why you are moving, of course. Taking a haircut on what you thought your house was worth makes sense if you can find what you want at a reduced price if you are going up the chain.
How about rents? A bit more clear blue water there, with the North East increasing by 8%, and the North West by 6% - but the shape of everything is still the same. The London “bring up the rear” trend still continues, but at least it moved positively (+1.1%). Many are reporting drops in asking rents, but of course existing tenancies are often still catching up with the huge rises over the past few years.
How about the Zoopla take? They cite average mortgage rates dropping below 4% as a reason for strong sale numbers (first time since 2022, but their 2022 graph shows lower rates than 2021 - which must be wrong, frankly - and their numbers in 2020-22 were under 2%, rather than under 4%!), and according to them 40% of homes for sale are now cheaper to buy with a mortgage than rent (the pedant in me despises this analogy, because rent includes insurance, maintenance, etc. - but there we go); they have house price inflation at 1.3%, and talk about higher house price rises in Northern England and Scotland, with price falls “moderating” in Southern England.
Zoopla’s £269,900 average UK house price is incredibly close to the ONS’s average house price of £270k. It would seem we have a “winner” when it comes to the average property price in the UK.
They correctly identify the lower stress-testing rate of 6.5% as a big help (compared to 8.5% a year ago). Their 40% number in terms of houses being more affordable to buy - whilst built on a false premise - sat at 25% just 12 months ago (and as their methodology is consistent, that’s a fair comparison - but this is mostly because of the stress test at 8.5% being chipped to 6.5%, rather than a dramatic change in affordability, please note). It breaks back to more than 50% of homes being cheaper to buy than rent on their metrics in the North, and in Scotland, but fewer than 40% of them being cheaper in the Midlands and the South. I’m not sure I’d agree with the grouping there, in general - the Midlands is a lot closer in pricing to the North than it is to the South (especially the South East/London), but there we go.
What’s the same old story, month in, month out, at the moment - correctly - improved affordability. That looks to be persisting at the moment. It’s been over 3 years now that earnings have outpaced house prices (since December 2022) - and it isn’t a small gap, it’s a cavernous one. Zoopla has Northern Ireland up 8% and London and the South East down 0.2% and 0.1% respectively.
Always interesting stuff. Onto the statutory homelessness figures - and this is the quarterly release that takes us up to the end of Q3 2025. The figures, and the surrounding explanations, sound very much like an inflation report from the past few years. The number of households in temporary accommodation is still going up, but the rate of increase is slowing. We’d expect this with the cost of living crisis “officially” over; the effects will last a decade or more, as people adjust. The win - as far as this Government is concerned, and for once I’d agree with them - is that fewer families are in B&Bs (and also fewer of them are in B&Bs for over 6 weeks, which is the statutory limit). It’s actually been falling since before the last election - but let’s de-politicise this because this administration has deliberately targeted this particular metric.
In Q3, 5,660 households were threatened with homelessness due to the service of a section 21 notice. This was down 18.6% on Q3 2024. That metric in isolation has a number of interesting talking points, I think. Firstly - why so many in Q3 2024? Well, rents were rising at a rate that many tenants who would - when faced with a s21 - have limited options other than to present themselves to the council. Double digits, or thereabouts. Secondly - does this mean we’ve seen the peak and this is on the way downwards? We will find out over the coming 6 months, of course, because these figures are lagging quite a bit - but my sense would be there will be a second spike before section 21 is finally removed.
Then - the harder part that requires some conjecture. If 5,660 households presented in Q3 of 2025, how many section 21s were served? What percentage of section 21s require the tenant to go to the council, rather than to attempt to secure another private sector rental property? That is quite a tough one, and also would vary massively depending on geographical area, I’m sure. Impossible to speculate, to be honest. All we can say for sure is that 5,660 is certainly not all of the section 21s that would have been served in Q3 2025.
6.7% more households saw the “main duty” come to an end in Q3 2025 compared to a year before - this is almost always when households accept an offer of settled accommodation, so the system is working slightly better.
However…..and you knew it was coming. 134,760 households were in temporary accommodation, 7% more than the year before and 1.8% more than the quarter before. This broke back to 6.5% more households with children and 7.8% more single households.
The mindblowing bits next. 176k children live in temporary accommodation. 2.06% of all London households are in temporary accommodation. 0.28% is the rate in the rest of England. Newham has 6.07% of its households in temporary accommodation - complete crisis.
Slough is the highest outside of London with 2.5% involved in temporary accommodation. How about the B&B progress? The numbers are down a creditable 20.9% in the past 12 months. The number in B&B with dependent children is down 46.6% to 2880 households. Still too many, but no-one could say that isn’t progress. The target is zero this parliament - which is likely impossible just because of the transitional/frictional factors at play, but a creditable target nonetheless. Pre-covid it was about 1500, for context, but it touched 6000 in the middle of 2024.
Some of the other anomalies remain though - for example, the most common length of time for households with children to spend in TA was 2-5 years (22.9% of households with children in TA). For adult-only households the most common length of time is under 6 months. These reports can be frustrating at these sorts of points because they don’t say “why” - but the why is that there is a massive shortage of family homes not in TA (move-on accommodation, or equivalent) and the unsaid part is that the frozen LHA rate completely facilitates this. If there was a less ideological stance against LHA, then perhaps a solution could be considered (how about unfreezing the 3 and 4 bed rates, for example - those are the rates that would directly impact TA - or, how about a rate that applies only for households leaving TA? Both would be far better than just wrecking the LHA system and turning a deaf ear and a blind eye).
Out of area placements were up 6.7% year on year. This is rife in London, as you can imagine and will know, and the figures in Newham leave you with no doubt as to why!
Then, the controversy of the “causes and circumstances” - a carefully chosen phrase. Up first - “family or friends can no longer accommodate” - aggregates a few different scenarios. “End of private rented AST” - the bit that they think will go down with no section 21, but if evictions are happening because of rent arrears they will still go on, and if they are happening because the landlord is selling they will also still go on. It might save a few on anti-social behaviour grounds? What progress that would be……
Next up - domestic abuse. Those three causes and circumstances cover the vast majority. The report goes into much more detail about age, ethnicity and the likes but I am going to leave the analysis there - overall, targeted progress but the problem continues to get worse before it gets better, and I’d be stunned if the next two quarters they are reporting on up to RRA make any difference on that front - and indeed it isn’t as if everyone who would like to sell their rental properties will be all done and dusted by 31st March 2026 for a whole number of reasons. The area is still growing, and still needs further attention as the problem grows, the immediate billions of pounds spent on this area continues to grow, and the much larger long-term damage to the people involved, and to the Treasury as a whole, also continues to grow.
Consumer confidence, then. The index from GfK had made some minor gains over recent months, but slipped back to -19, which is the average level since the 2024 election. Now - in summer 2021, when it looked like the pandemic was behind us and the vaccine rollout would have been largely judged a “success” the index looked more like -7, and in mid-2024 with hope for this new parliament percolating through the economy the number was -13. Yes - we are a miserable bunch overall. In the wake of Truss and the energy crisis, the number was more like -40 for a 9-month period or so - so that’s the context. Closer to the higher side than the crisis side, but still well below par - that’s what the number tells us.
For the pre-covid days, we used to print around about -10 or a little better on average. The index breaks back into looking back over the past 12 months at personal finances (the index printed -7), looking at the next 12 months for personal finances (+2), the general economic situation over the past 12 months (that gets an ugly -44), the economy over the next 12 months (-31), and then a major purchases index (which printed -14). The index has rowed back to where it was one quarter ago, and actually looks almost identical to where it was 12 months ago. Why do we care? This is a massive handbrake on growth. If consumers save instead of spending, businesses don’t do as well, and consumption is the single largest component of GDP growth by some way.
Interestingly, this week I attended the Bank of England briefing following the MPC meeting, and their assumption is that the savings rate will fall from the 10% sort of level that it has been printing back to 7.5% (still high for the UK) within 3 years. That’s a big contributor towards economic growth with a “ming vase” style methodology - it’s nothing to do with politics apart from the incumbents not messing it up. It’s a reversion to the mean following a pandemic, is the assumption (the rate of how quickly we revert to the mean is the thing that’s up for debate, of course. I personally don’t see a point when the Labour party starts to inspire the general population, but if there was change at the top - who knows…..watch the space after the May elections, I guess).
What we are seeing - as so often in recent years - is treacle, one step forwards, one step back. That sums up the current economic situation pretty well. Taxes too high, not helping growth (as we were promised) - we are where we are.
The gilts, then. As speculation grew on Friday, and evacuations of embassies in Iran started, and the likes - the bonds started to rise in price and yields started to drop. This is a typical market reaction in these situations - a flight to Government bonds as the safest haven. The longer a war involving a significant power lasts, the more that commodities tend to do well, as time goes on - although we have had a bull run in many, including precious metals, already of course. The 5 year gilts opened last week at a 3.764% yield and closed at a 3.672% yield - the 3.708% close on Thursday night mapped across to a swap rate of 3.511% which was the lowest for some time (1 month ago - 3.725%, 1 year ago - 3.882%). That discount is still milling around the 19-20 basis point level.
The 30-year gilts opened at 5.136% and closed at 5.038% - very similar to the 5 years, with around 10 basis points shaved off on both. The next week will no doubt be a volatile one, for reasons already discussed. As I’ve reached this point, the Strait of Hormuz is to be closed, it has been announced (20% of the world’s oil and gas passes through it). That can only do one thing to pricing as you can imagine.
Into the deep dive - and as usual, I try to get across the spectrum with a smorgasbord of reports from stakeholders with differing angles and agendas. The four on the slate this week: The Regulator for Social Housing’s quarterly survey of private Registered Providers and their financial health (for Q4 2025); Shelter’s latest effort on what they call “Need-Led” Housing Policy; The think tank Common Wealth putting forward a framework for delivering retrofit via Home Improvement Corporations; and Savills report entitled “Slow and Steady: the changing face of English land supply”.
The RSH report first, then:
Theme 1: Debt Accumulation and Liquidity
The Summary: Total agreed borrowing facilities in the social housing sector climbed to £140.1 billion by the end of December 2025. Providers secured £4.2 billion in new funding during the quarter, which significantly outstrips the three-year quarterly average of £3.1 billion. Bank lending dominated this influx of new finance, making up 74% of the total, while capital markets accounted for the remaining 26%. Consequently, drawn debt saw a substantial net increase of £2.7 billion. Overall, the sector maintains £34.5 billion in available liquidity, combining £4.2 billion of available cash and £30.4 billion in undrawn facilities. This financial buffer is reported by the regulator as sufficient to cover forecast expenditure for the upcoming year, encompassing £5.0 billion in net interest costs, £3.9 billion in loan repayments, and £12.3 billion for net development.
The Propenomix Perspective: The regulator clearly wants us to cheer about that £34.5 billion liquidity buffer, but let us look under the hood. A £2.7 billion net jump in drawn debt in a single quarter is not a sign of comfortable expansion - it is the largest single-quarter spike in 14 years. Providers are loading up on bank debt just to keep the lights on and the development pipelines sputtering along. While it is true the Bank of England finally trimmed the base rate down to 3.75% in December, the underlying cost of capital remains sticky. We see 15-year swap rates hovering around 4.19%. Bank lending dominating the new debt pile means these private registered providers are leaning heavily on traditional, potentially more volatile, financing routes rather than capital markets. They are borrowing heavily just to stand still, which is a highly precarious long-term strategy.
Theme 2: The Squeeze on Interest Cover and Maintenance
The Summary: Financial performance indicators reveal ongoing pressure across the sector, with the 12-month outturn cash interest cover sitting at 78%. Forecasts for the next 12 months project this dropping even further to an estimated 67%. In the third quarter alone, cash interest cover fell sharply to 68%, down from 99% in the previous quarter. This contraction is largely attributed to a £0.2 billion rise in repairs and maintenance costs, alongside a £0.1 billion increase in interest payments. Total expenditure on repairs and maintenance reached £2.4 billion for the quarter, the second-highest recorded figure since comparable data collection began. Consequently, net operating cash flows are currently inadequate to cover net interest payments, resulting in an average quarterly cash shortfall of £246 million over the year to December 2025. At the close of the quarter, 29 providers reported relying on loan covenant carve-outs or waivers.
The Propenomix Perspective: This is the absolute crux of the crisis for the social housing sector. An interest cover of 78% is already firmly in the danger zone, and projecting a sector-wide drop to 67% is effectively waving a white flag to lenders. When your net operating cash flows cannot even service your debt interest, you are burning the furniture to keep the house warm. The £2.4 billion spent on repairs in a single quarter is a staggering figure, but it was entirely predictable. Between the updated Decent Homes Standard, stringent energy efficiency mandates, and the strict implementation of Awaab's Law, providers are being forced to pour capital into existing stock just to remain compliant. They are bleeding £246 million a quarter simply to keep their heads above water. It is no surprise that 29 providers are relying on covenant waivers. The operating margins are being decimated by statutory compliance, leaving absolutely no room for error.
Theme 3: Development Stagnation and Sales Struggles
The Summary: Investment in new social housing remains suppressed, with £13.0 billion spent on development in the year to December 2025, compared to £13.7 billion in the previous year. The sales market for providers is also facing severe headwinds. While first-tranche Affordable Home Ownership (AHO) sales rose slightly, the margin achieved improved to just 14.7%, remaining amongst historically low levels. Furthermore, the volume of unsold AHO units swelled by 11% to reach 7,313 properties. Outright market sales suffered a significant 24% drop in completions compared to the prior quarter, sitting well below the three-year average. To compensate for these operational cash shortfalls, the sector is increasingly relying on the disposal of fixed assets, with these sales totalling £3.4 billion over the past 12 months, an 11% increase on the previous year.
The Propenomix Perspective: The development engine has officially stalled out, and frankly, I am not the least bit surprised. Spending £13.0 billion on development sounds substantial on paper until you realise it is a tangible year-on-year drop. The real horror story is hidden within the sales data. A 14.7% margin on first-tranche AHO sales is miserable. It tells me loud and clear that providers are taking a hit just to shift stock in a stagnant, unforgiving market. And yet, they are still failing to clear the inventory - sitting on 7,313 unsold AHO units is a massive, illiquid drag on capital. To mask this abysmal operational performance, they are aggressively selling off the family silver. Flogging £3.4 billion of fixed assets is not a viable, repeatable business model; it is a liquidation sale designed to appease lenders and meet strict loan covenants. The long-touted model of cross-subsidising social rent through open market sales is fundamentally broken in this macroeconomic climate.
Shelter’s report next - Build Up Not Trickle Down - The Case For Need-Led Housing Policy:
Theme 1: The Affordability Illusion and Private Supply
The Summary: Shelter's report argues that the last fifty years of government housing policy have been built on a fundamental flaw: the belief that market demand can solve housing need. Relying on private supply to "trickle down" and improve affordability has failed to reverse the staggering rise in house prices seen over the past four decades. According to the government's own economic modelling, a 1% increase in overall housing stock only leads to a roughly 2% fall in house prices. The report points out that the vast majority of transactions - around 90% - occur in the secondary market, fundamentally limiting the price impact of any new builds. Instead of a lack of supply, the report attributes skyrocketing prices to falling interest rates, liberalised credit, and the treatment of housing as a financial asset by investors.
The Propenomix Perspective: I have been saying this for years - building our way out of high prices is a mathematical fantasy. Shelter hits the nail on the head regarding the secondary market dominance, but they miss the wider macroeconomic picture entirely. Yes, cheap credit and plummeting interest rates pumped up asset values. That is basic economics. But when they dismiss the private market's role so casually, they ignore the reality of development finance. You cannot expect private housebuilders to act like charities when their cost of capital is tied to volatile SONIA swap rates and their equity investors demand double-digit returns. The "financialisation" of housing they complain about is exactly what happens when gilt yields stay artificially suppressed for a decade. The market is not broken; it is functioning exactly as it is incentivised to function. If you want lower property prices, you need a fundamentally different cost of money, not just a different planning system.
Theme 2: The Viability Loophole and Land Valuation
The Summary: The report highlights how the current planning system allows developers to avoid affordable housing requirements through complex viability loopholes. Analysis of 23 land transactions in London between January 2023 and June 2025 reveals that developers consistently overpay for residential development sites. In these instances, the total difference between the benchmark land values and the actual prices paid was approximately £230m. Shelter calculates that if this significant "overpayment" had been used to provide affordable housing instead, nearly 1,000 additional affordable homes could have been built. Developers allegedly use lower build cost assumptions internally while presenting higher costs in their financial viability assessments to artificially depress residual land values and negotiate down their social housing obligations.
The Propenomix Perspective: Here is where the report gets genuinely interesting - and where my scepticism flares up. Shelter paints developers as cartoon villains hoarding cash in the shadows, but they fail to grasp the competitive realities of the land market. If a developer does not bid aggressively for a prime site, a rival absolutely will. It is a structural flaw in the residual land value model, not a moral failing of the builders. The report notes that developers use different internal metrics compared to their planning submissions. Frankly, I would be deeply worried if they did not. Anyone who has looked at a site appraisal knows that build costs are volatile and financing costs are subject to wild swings. Developers pay what they must to secure the pipeline. If local authorities actually enforced their own benchmark land values rigidly, land prices would have to correct - but local councils are far too desperate for any development to take that risk.
Theme 3: Build-Out Rates and Market Concentration
The Summary: A key argument in the document focuses on the speculative development model and the immense market dominance of volume housebuilders. Shelter asserts that developers actively restrict the pace of housing delivery - known as the absorption rate - to maintain local house prices and maximise profit margins. The report notes that the market share of the top ten largest housebuilders has grown dramatically from around 18% in the early 1970s to roughly 50% by the early 2000s. By controlling scarce developable land, these firms can simply drip-feed new homes into the market. Furthermore, volume builders reportedly target high profit margins of 20% to 25% of gross development value, prioritising massive shareholder returns over increasing the volume of housing output.
The Propenomix Perspective: Shelter's outrage over absorption rates shows a staggering lack of commercial awareness. Of course developers restrict build-out rates. If you flood a local market with 500 units on day one, prices crash, the scheme becomes entirely unviable, and the bank pulls your funding instantly. It is basic risk management. The report correctly identifies that market concentration is a severe issue, but they forget to ask why SME builders disappeared in the first place. It is because the planning system became so convoluted and upfront costs so punitive that only the major players with massive balance sheets could survive. Targeting a 20% margin on gross development value is standard practice when you consider the planning risk, the capital lock-up, and the exposure to macroeconomic shocks. If you want faster build-out rates, you have to derisk the delivery process, not just shout at developers for protecting their downside.
Theme 4: The Case for State Intervention and Social Housing
The Summary: To resolve the housing emergency, the report proposes a permanent shift towards a need-led housing policy centred heavily on large-scale social housing delivery. Shelter calls for the construction of 90,000 social rent homes annually over the next ten years. They recommend requiring all large developments to include a strict minimum of 20% social rent housing to provide certainty and help depress inflated land values. Additionally, the report advocates for much stronger state intervention, including the compulsory purchase of stalled sites and the aggressive removal of "hope value" for land acquired specifically for social housing. Ultimately, Shelter argues that relying on private development will inevitably fail to meet the government's target of 1.5 million homes without this substantial public investment.
The Propenomix Perspective: I am perfectly happy to agree that the UK desperately needs more social housing. The collapse in state delivery since the 1980s is the glaring hole in our national infrastructure. However, Shelter's roadmap for getting there is a complete pipe dream. Demanding a blanket 20% social rent requirement on all large sites without massive public subsidy will simply make marginal schemes unviable, meaning zero homes get built - private or social. And compulsory purchase orders without hope value? Good luck watching the ensuing legal battles tie up development sites for a decade. The state cannot just legislate away the economic reality of land ownership. If the government actually wants 90,000 social homes a year, they need to write the cheques themselves. Stop trying to squeeze blood from the private sector stone and start funding public works like a serious economy.
Next up, Common Wealth’s “A Plan for Places - Transforming Housing and Lowering the Cost of Living Through Home Improvement Corporations”
Theme 1: The State of England's Housing and the Failure of Retrofit
The Summary: Around 3.8 million homes in England fail to meet the Decent Homes Standard. Furthermore, nearly 12 million homes require retrofitting to achieve a basic level of energy efficiency. Historical state-backed programmes to address this, such as the Energy Company Obligation (ECO) and the Great British Insulation Scheme (GBIS), have heavily prioritised emissions reductions over housing quality. These schemes ultimately incentivised contractors to minimise costs to maximise profits, resulting in substandard workmanship and poor design. Consequently, the government announced the termination of these schemes. Millions of households continue to live in cold, damp conditions that keep energy bills high and contribute to health conditions estimated to cost the NHS £1.4 billion annually.
The Propenomix Perspective: This is exactly what happens when policy is driven by spreadsheet targets rather than market realities. The government chased cheap carbon savings and ended up subsidising botched solid wall insulation that ruined housing stock - a classic unintended consequence. The index says we are decarbonising, but the reality on the ground is widespread damp and mould. As an investor, you have to look at the underlying capital requirements. Fixing this isn't just about slapping some solar panels on a roof - it requires fundamental structural repair. When the state artificially stimulates demand through poorly designed grants without addressing supply constraints, you get price inflation and terrible quality. The state of our pre-1919 terraced stock is dire, but simply ending ECO4 and hoping the next scheme will magically dodge these supply chain bottlenecks is utterly naive.
Theme 2: The Push for 'Home Improvement Corporations' and DLOs
The Summary: To resolve delivery issues, the report proposes establishing approximately thirty subregional Home Improvement Corporations (HICs) operating at a county or combined authority level. These statutory bodies would coordinate area-based, street-by-street retrofit schemes. Crucially, the report argues against relying on private contractors, instead recommending that HICs employ permanent Direct Labour Organisations (DLOs). This shift aims to create a stable, unionised workforce with higher pay and better employment security. The objective is to build a skilled workforce of installers, coordinators, and architects capable of delivering the estimated 140,000 new workers required to meet current housing retrofit targets.
The Propenomix Perspective: Here we go again - the relentless belief that a new layer of bureaucracy will solve a fundamental economic problem. Creating thirty new quasi-governmental bodies to employ 140,000 public sector builders sounds like a productivity nightmare waiting to happen. We already face chronic labour shortages in the construction sector. Poaching tradespeople into state-run DLOs does not miraculously create new capacity - it simply shifts it away from the private sector and probably adds a massive public pension liability into the bargain. While I agree that the fragmented private subcontracting model has failed, replacing it with a monolithic municipal workforce ignores the realities of modern project management and cost control. Capital flows where it is treated best, and a state-monopolised labour force will inevitably drive up the underlying cost of delivery, regardless of what the feasibility studies claim.
Theme 3: Blended Funding Models and Zero-Interest Loans
The Summary: The proposed financial model operates in two phases. Phase 1 targets the most deprived neighbourhoods (IMD 1 and 2), offering fully grant-funded retrofits for approximately 3.28 million homes below EPC C. This phase requires an estimated £19.4 billion in funding, supplemented by £5.4 billion in landlord contributions. Phase 2 extends to IMDs 3-6, utilising a blended funding model that combines public grants with zero-interest, property-linked loans. For households in IMD 3 and 4, the split is a 60 per cent grant and 40 per cent loan. The report suggests financing these loans at the prevailing ten-year gilt yield of 4.5 per cent, which would require significant government interest subsidies to maintain the zero-interest rate for consumers.
The Propenomix Perspective: Let's look at the actual mechanics here. The proposal relies on the government borrowing at a 4.5 per cent gilt yield to hand out zero-interest loans. Subsidising that negative spread counts as current spending, which will hit the Exchequer precisely when fiscal headroom is effectively non-existent. But the real kicker is for the private rented sector. Private landlords are expected to cough up 50 per cent of the costs in Phase 1 and 100 per cent in Phase 2 for their portfolios. In an environment where SONIA swap rates remain sticky and the cost of debt is already squeezing margins, demanding compulsory capital expenditure without equal grant support is a surefire way to compress yields further. It is basic economics - if you mandate uncompensated capital outlay, you will force further rationalisation of private portfolios.
Theme 4: Tenant Protections and Market Interventions
The Summary: To prevent public investment from causing gentrification and tenant displacement, the report insists on robust regulatory interventions. It proposes a national rent stabilisation framework to prevent landlords from passing retrofit costs onto tenants, capping rent increases at the lower of inflation or wage growth. Furthermore, landlords receiving public funding would be banned from executing no-fault evictions for a minimum of five years post-retrofit. If a landlord sells the property within this period, they would be required to repay the grant value to the local Home Improvement Corporation. Additionally, the report recommends empowering HICs to use Compulsory Purchase Orders to acquire long-term empty homes and convert them into social housing.
The Propenomix Perspective: This is the classic regulatory trap, and it is a masterclass in how to inadvertently destroy housing supply. The narrative is always about "tenant protection", but let us look at the actual investment mechanics. You force a landlord to upgrade a property, cap their rent so they cannot recover the capital outlay, and then trap them in the asset for five years under threat of a financial penalty. This is not a housing strategy - it is an eviction notice for private capital. The rental yield reality is that if you cap upside and mandate downside risk, capital will simply flow to more hospitable asset classes. And casually tossing around Compulsory Purchase Orders as a threat to acquire private property? It is astonishingly hostile to property rights. The market is shifting - and quickly - but policies like this will only accelerate the exodus of private providers.
Last up this week, the Savills report “Slow and Steady: The Changing Face of English Land Supply”:
Theme 1: The Planning Application Mirage
The Summary: Revisions to the National Planning Policy Framework (NPPF) in December 2024 have created a more favourable environment for housing delivery in England. The reintroduction of mandatory housing targets and a "Grey Belt" review have notably improved confidence within the housebuilding industry. This policy shift has resulted in a 44% year-on-year increase in residential applications submitted, reaching an estimated 320,000 homes in the year to Q3 2025. However, this uptick in submissions is facing significant processing bottlenecks. Data shows that the average determination period for live applications and recently determined consents is 14 months, extending to over two years for sites delivering over 500 homes. Only 17% of major applications in England were determined within the statutory timeframe in 2024, a sharp decline from 47% a decade earlier.
The Propenomix Perspective: We need to separate the headline euphoria from the dirt-kicking reality on the ground. A 44% spike in applications sounds fantastic for a government press release, but submitting a form does not lay a single brick. Local planning authorities are chronically underfunded and bleeding staff - something this report clearly signals with those 14-month average wait times. If you are a developer holding a site for two years just to get a stamp on a piece of paper, your financing costs are eating you alive. We are still operating in an environment where SONIA swap rates dictate the cost of capital, and capital is simply not cheap enough to warrant sitting on your hands for 24 months. The government can tweak the NPPF all it likes, but until they actually resource the planning departments to process these applications, that 320,000 figure is nothing more than a bureaucratic traffic jam waiting to happen.
Theme 2: The Historic Deficit and Speculative Failure
The Summary: Despite the sharp increase in applications, the volume of plots submitted remains significantly below historic trends. The recent surge follows a period of severe contraction, where the volume of plots on submitted applications fell by 42% in the three years leading up to 2024. Current application volumes are still almost a third lower than the pre-pandemic norm observed between 2017 and 2019. Furthermore, provisional data indicates that the number of new homes receiving planning consent in 2025 fell below 200,000. The Savills report also highlights that historically, 8% of all lead applications submitted over the past decade were either refused or withdrawn. With the current planning landscape viewed by some developers as a time-limited opportunity, there is an expectation of more speculative applications, which is likely to increase the proportion of applications failing to reach the full permission stage.
The Propenomix Perspective: Context is everything in property economics. Celebrating a bounce in applications after a 42% collapse is like celebrating finding a tenner in your pocket after your car has been nicked. We are still a third below the pre-pandemic baseline. Let that sink in. The narrative that we are on the verge of an oversupplied land market is absolute nonsense - and provisional full-year consents for 2025 sitting below 200,000 proves it. What we are actually seeing is a speculative land grab. Developers are chucking mud at the wall to see what sticks in this new "Grey Belt" era, which guarantees we will see a spike in refusals and withdrawals. Quality sites with genuine deliverability are still rarer than a cheap pint in London. If you are assessing the land market, do not look at the gross application numbers. Look at the net viable consents - and right now, those numbers are flashing red for anyone hoping for a sudden flood of cheap, build-ready land.
Theme 3: The Regional Squeeze and Contracting Pipelines
The Summary: The national growth in the planning pipeline masks significant regional disparities that impact land market dynamics. In 158 local authorities - representing 54% of the total - new homes have been built out at a faster rate than new consents have been granted. This indicates a looming shortage of consented land in these specific areas. This imbalance is particularly evident in the North of England, driven by greater affordability headroom for consumers, and in the East of England, where issues like water availability, nutrient neutrality, and grid capacity have restricted new consents. Overall, 29% of local authorities are experiencing a contracting development pipeline of both planning consents and applications. Crucially, almost 48% of housing need in England is located in local authorities that currently have a deficit in new home permissions relative to their current completion rates.
The Propenomix Perspective: This is where the macro narrative falls apart and the micro reality bites. You cannot average out the UK property market. Over half of our local authorities are burning through their land banks faster than they can replenish them. If nearly 50% of the national housing need is trapped in areas with shrinking pipelines, we are walking face-first into a localised supply crisis. The East of England is a prime example of how infrastructure constraints - specifically grid capacity and nutrient neutrality - are acting as a hard cap on development. You can have all the planning permission in the world, but if you cannot plug the houses into the grid, or flush the toilets legally, the land is useless. For investors and developers, this means competition for clean, unencumbered sites in these supply-starved regions is going to be fierce. Expect land values in these specific pockets to remain stubbornly high, regardless of what the broader national indices are telling you.
As we get towards the end for this week - our Manchester Property Business workshop is continuing to sell very well. 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 in January, and got some superb feedback - the upgrade is well worth it. There are FOUR Super Early Bird tickets left, make sure to snag one before they are all sold out! Book your tickets for Wednesday 22nd April, Central Manchester at: www.tinyurl.com/pbwten
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.