"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to its close. In its place we are entering a period of consequences." - Winston Churchill
This week’s quote is straight from the horse’s mouth that Mr Trump seems to want to cite on a regular basis - perhaps it is time he read some of his wisdom?
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 - Whilst Iran rumbles on, and oil sits at between 48% and 57% up on the month, with European gas looking closer to 100% up on the month, tariffs are back on the menu. With the Supreme Court ruling, the maximum threat is now 15% rather than the rhetoric of last year - and that’s moving from 10% already loaded, remember (in the round - it is more complex than this of course) - and that maximum threat is already being thrown around. Cost to the UK economy - estimated at between £2bn and £3bn. Not huge - not insignificant either.
This week the official investigation into 60 major economies including the UK, looking for “forced labour” and “manufacturing overcapacity”. Read - excuses or reasons for more tariffs or other measures, of course. What is the UK doing about it, as an energy “whipping boy” after 50 years of failed energy “strategy” or lack thereof? Considering lowering speed limits to help conserve fuel. I’m not even sure if that works unless you are talking solely about the motorways, since last time I checked the optimal speed of an internal combustion engine was around 56mph (depending on the vehicle) - most will laugh if they drive on the M25 regularly, of course. If that’s our best plan, it just shows how weak and dependent we are as a nation when it comes to energy - which we learned in 2022, and on the back of that announced all sorts of forays into nuclear power……except we didn’t. We talked about it a bit.
The Trump card, if you allow me that poetic licence, for Iran (in terms of the Strait of Hormuz) has now very much been played. There are alternative routes which could ALSO be closed to cause maximum disruption - so we aren’t there yet. The conventional wisdom (which makes sense) around the fertilizer situation (Hormuz sees up to a third of the world’s internationally traded fertilizer go through it in “normal” times) is that this will hit food prices next year - but there’s time to work out alternatives, of course, if this year’s supply is in the stores (which you’d expect it to be). Around half of all fertilizer is produced domestically, so the numbers on this are not as scary as some of the mainstream media have made out (not minimizing, just calling it like it is…..)
I seem to be doing more “Truss Comparison” at the moment and I suspect that will go on for some months, years, and frankly decades - I have a long memory……this week’s appropriate one would be the current estimate for the July price cap moving to around £2k this summer. When the energy bill bailout came - arguably the only positive move under Truss, apart from the Stamp hiatus between 125k and 250k of course (no conflict of interest there at all, is there?) - the cap was at £2,500 of 2022 money. So I don’t really know why we are talking about any kind of universal bailout at this time - seems ridiculous. Target the bottom 10% of households and have something sorted by October 1st? Perfectly reasonable. The heating oil piece? Tough one to get right. Pushed to local authorities to make sense of it because they understand the demographics and the obligations. Heat pumps anyone?
There could of course be physical shortages, and comparisons to the 1970s and the three-day week will become rife if that happens. Not Labour’s fault, their supporters will say - with some point. My rebuttal? Everyone who has been in Government for the past 50 years+ fault, frankly, due to poor energy policy.
None of this is good. Don’t get me wrong. But to suggest it looks like 2022, at this time, is just false. The bigger problem is that it is getting worse not better, and - just as I said about Ukraine in 2022 - when you can’t see a way out, these things tend to rumble on.
What’s the question I feel bound to ask? How much is Iran hurting themselves by keeping Hormuz closed? Well, even Chinese vessels aren’t risking the journey at this time. The attacks have stepped up on infrastructure when it comes to naval vessels and also energy. Oil terminals, gas fields…..all on the table. How do China feel about Iran’s actions? Anyone’s guess. It’s probably obvious that Iran’s “new old” regime sees this all as an existential threat so any secondary concerns (even around economic collapse) are secondary to regime survival.
From an economic perspective, it costs an awful lot less to blockade/defend the strait than to police or “guarantee” passage through it. But then the US has infinite money in these situations. The threat is also more about threat than 100% success or sinking everything that passes through the strait. Drones and mines do a very effective job for a lot less money. Sanitizing the coastline won’t work. Perhaps the US and Israel just escalate in terms of infrastructure attacks and then a ceasefire is called sooner rather than later? Or maybe that’s just too hopeful.
Trump isn’t getting what he wants from his NATO allies (and all that effort he’s put into building those relationships - who would have thought it?) - but also hinted on Friday that he may soon begin “winding down” the military campaign. His other plan is that those steering oil tankers through the strait “grow a pair”. Not the most comprehensive military strategy of modern times.
I suppose the no-brainer part from an observer with an opinion but no expertise is really that if there was ever to be a greater incentive to develop a nuclear weapon, so this doesn’t happen again - surely this is it. That’s the perversity of the incentives here. Public hangings of protestors continue in order to keep a lid on any potential uprising, and the mass slaughter from January keeps the people “controlled” to an extent.
We retreat, once again, to the safety of the UK real-time property market. Chris Watkin’s analysis/roundup of week 10 of the UK Property Market. Chris “runs” Sunday to Sunday, so this was the week ending 15th March. We continue to pull ahead of 2025 in listings for one MORE week - (362k on the market so far is 1.2% above 2025 and 12.8% ahead of the 10-year average). The glut of listings is persisting. 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. And - remember only a little over HALF of what’s listed actually sells (unbelievably) - so my personal theory is that a lot of this ends up getting re-let after it doesn’t sell, which is why rental supply is moving downwards but not crashing, overall. Also - with so many first time buyers - are there fewer actual RENTERS out there? That’s a tough one to answer with official data, but it is a reasonable hypothesis (which also depends on net migration numbers). We do know demand is down.
Gross sales are at 246k SSTC YTD, 8.4% higher than 2024 but 3% lower than 2025 (that has come back from 6% under, because we have reached the time where people knew it was too late to make the SDLT deadline). The lack of that 31st March deadline, the urgency, and the time pressure looks sure to 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. April 2026 should be drastically superior to April 2025 - we know that - and that trend looks to have already started. 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 8.6% ahead of 2024, at 192k. 14.9% ahead of the 2017-19 market, and 24.2% ahead of 2023 which as we know was “limp lettuce” territory all year. 4.5% lower than 2025, though, with reference to the above caveats.
To start March there ended up being a 10-year+ record number of homes on the market (for a March, to be clear - we haven’t yet ascended or beaten the peaks set in 2025) - 682k thanks to this record Boxing day and solid January/February - 2025 Mar 1st saw 675k OTM, so it is 1% 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 were back under 25k - 22.9k for the week, 11.4% of stock was reduced in February, 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; 19.6% in week 10, (longer-term average 24.2% - all far too high of course, but all numbers have to be looked at in context of the “norm”).
February ‘26 saw sales agreed averaging £343.36, 2.3% ahead of a year ago. Much closer to the current ONS numbers. This number is 18.2% ahead of 5 years ago - February 2021 was really accelerating very fast in terms of pricing and a huge slice of that 18.2% happened in that one year. We will keep monitoring. Exchanged prices were well above this for the month - £339.57 per foot, which is a big move down from £348 in January. These deals were likely agreed BEFORE the November 2025 budget, or around it - so it makes sense for them to be a bit lower. Let’s not read TOO much into one month’s figures though, as I always say - that particular graph is always noisy - even with 100k transactions a month, things don’t quite smooth out as easily.
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!
Week three of March, and macro-wise, we had the ONS unemployment figures (beating consensus for the first time in a long time), Rightmove’s House Price Index, MHCLG data on planning applications in England, and of course for afters we have the gilts and the swaps, as usual (that slot isn’t going anywhere).
Let’s kick off with the labour market report for January, then. 6000 extra people went on payrolls between December and January. Small victories to be celebrated. February’s estimate is for 20k extra people on payrolls - and this is the first time in many months I remember this being a meaningful upward number. Just an estimate at this time, please note.
The EMPLOYMENT rate, which is my favoured metric, also ticked up 0.1%. It now stands 0.5% better than at the election of the Labour party. I labour this point (sorry) because no-one else is saying it - not because I think they’ve done a great job - they demonstrably haven’t. Indeed this has happened DESPITE them rather than because of them - because luckily, the economy in general keeps calm and carries on.
Economic inactivity has also ticked down to 20.7%. It’s still a laughable number in my view, but also the measurement in general is a poor one. We know that within these figures, youth unemployment is terrible as well.
Vacancies decreased a little, by 6000 or so, in the past quarter. But it is reasonably flat now after shedding of vacancies after the post-Covid peak. Employment was up 60k in the final quarter of 2025 - 0.2% - but self-employment was down 28k. Many small businesses would agree - and if you think about it, it makes sense. If the minimum wage gets forced up so much, and rates and a multitude of other taxes go up more, the incentive to be self-employed simply erodes. Good for the country? Doubt it. Self-employment fell 0.7% in Q4 2025.
Over the course of 2025, employee jobs were down 25k, but self-employed jobs were down 242k. I’m stunned I haven’t seen or heard this framing anywhere else - that tells a huge story. If I was in the manosphere I’d be referencing the matrix right now, and doing that weird thing with my hands (if you haven’t seen it yet - watch it. I very rarely watch anything other than podcasts/economics news - really, I am genuinely that exciting - but it was a voyage of discovery, that’s for sure. If you’ve got kids, have a chat with them about it - especially boys/young men!).
Annual private sector wage growth rate - 3.3% compared to 5.9% for the public sector. The base effect is still going to phase out “over the next few periods”, apparently. Real pay growth (above inflation) is lagging around 0.5% - but at least it is positive, at the moment. That looks soon likely to reverse, with the Iran situation. If you work in the private sector - on average, the real increase is now down to zero.
Rightmove’s House Price Index, then. This sees asking prices up 0.8% in March, which it describes as “typical for this time of year”. Sun’s out, guns out, it seems. Stock on the market is at an 11-year high, RM tells us. They describe the market as steady despite the global uncertainty. In honesty - I am just grateful that our biggest problems are fuel costs and energy problems, compared to the hundreds of millions of people who are a lot worse off in a situation like this.
RM’s take is that we are only 2% behind the buoyant market of last year in terms of activity, and 5% ahead of 2024. They have new listings 3% behind last year - which shows (since the Watkin data is cross-portal) that Rightmove are losing market share, since across all portals listings are 1.2% up as discussed. They cite, once more, the clear north-south divide, and an opportunity for first time buyers with a small annual fall in asking prices in the typical starter home sector.
What RM classifies as a typical first time buyer home has an average asking price of £227k, down 0.4% on the year. Second stepper homes (average AP £346k) are up 0.6% on the year, with top of the ladder at 0.0% but up 2.3% in asking prices in March (that feels unlikely to be that successful, to me!).
Their resident property expert Colleen Babcock describes this year’s spring market as “steady rather than strong”. Fair. She also cites the longest average time to sell since 2013 - a 13-year stagnancy. That’s the symptom of such a lot of stock being there. Great advice from her as well which correlates with what we hear and conclude from Mr Watkin’s efforts every week as well:
“In this kind of market, being not only competitive on price, but competitive from the outset when setting an asking price for your home is critical. Our research shows that relying on later price reductions is a much tougher and less effective strategy when buyers are very price sensitive and have so many alternatives to choose from.”
I would only add one thing to this - a point that was made to me by someone this week which resonated. When there’s SO much choice - blindness and prevarication are bound to rule. Give people too many options and they choose none. I always say this to people on proposing creative deals with vendors - don’t overcomplicate, and ideally offer TWO options. Rarely would I offer three. My price, your terms - your price, my terms.
They watch the average 2-year mortgage rate closely, and this has soared in the recent weeks of course. Up to 4.51% at the time of the report from 4.24%. Context from Colleen again - very sensibly - that’s an extra £45 a month on a new house purchase, but still £70 lower than it would have been 12 months ago.
Their mortgage expert tries to paper over the fact that the market now thinks rates will be back over 4% by the end of 2026, but does break the news we “probably won’t cut again” in 2026. No, Mr Smith, we won’t. Even the doves have voted not to cut in March - their first static vote for many a meeting, I think you will find. More on that later.
The regional asking prices tell a story too. London - APs down 2.1% Year on Year. South East - down 1.1%. East - down 0.2%. South West - down 1.8%. North West up 2.6%, with North East only up 0.6%. The East Midlands and Wales are the next best behind the North West, up 1.3% year-on-year.
A flat market with the North-South rebalancing (only about 100 years to go…….) still taking place in front of our eyes. Another good report from Rightmove, useful stuff.
Next up - stats from MHCLG on planning applications. Not sure this is what would have been expected with the liberalisation of planning - clearly viability is still having a serious drag effect. This certainly isn’t as advertised, of that I’m sure!
Planning apps down 4% compared to Q4 2024. Decisions also down 4% Q-O-Y. 20% of major applications were determined within 13 weeks. 20%. Jeez.
In case you are wondering about the year - 300,600 planning apps were decided (remember, that’s not all for building new units!) and that’s down 5% from the year before.
Surprised I haven’t seen much coverage about this, because this is the best evidence so far that the 1.5m homes is an utter pipedream. Applications on hand are down 2%. The graph is just horrible (since 2021, to be fair) - but this trend has NOT yet been arrested. The bottom is yet to come. The structural issues of supply and demand in the UK market are just to get worse, unless the population is to start falling (recent geopolitical events make that even more unlikely than it already was, in my view).
9,600 decisions were made in the quarter on residential developments - 7,300 were granted. 75%. 900 major decisions made - down 5%. Decisions are down 10% on the year and 6% fewer were granted. Build, baby, build - more like lie, baby, lie.
It’s all grim, it’s all down, and I can’t find a single positive in the report to show any sort of progress whatsoever. Has the trend downwards even slowed down? Not in these figures. I suppose the best thing I can say is “it can’t go much lower”. Or can it?
Now that’s cheered you up, I know what’s needed - another dose of gilts and swaps! You might have seen the headlines as the 10-year - the flagship bond - rose towards the 5% yield mark on Friday for the first time since the financial crisis - so you probably know that this is the third week in the row of the black armbands. They didn’t get there - topped out at 4.97% to close at 4.94% but they are clearly close.
This whole scenario has reshaped the yield curve somewhat. The first 7 years of the curve are very flat indeed. Ready to pivot one way or another. The market’s current estimate is that the base rate will end 2026 at 4.35% to 4.5%. Yes - that’s two or three rate hikes from here. May, August, November would be the smart money - 0.25% at the time - but if things get much worse/more inflationary before the May meeting, a 0.5% rise is not out of the question. In that somewhat bizarre way, NOT moving the base rate upwards will not help the 5-year yields which we watch week-on-week. The facts have changed, and we all need to change our minds.
Now - let’s pray to the God of Taco. Because Trump Always Chickens Out. We hope. He’s referred to winding down a couple of times, and he’s the sort of person who lets his feelings slip when he talks, because he is so very confident. As and when they feel they’ve done enough damage to Iran’s infrastructure - it will be on Iran to continue to retaliate, or not. China will be putting pressure on to return to normal - because they will want their oil. They don’t want Hormuz closed either.
So. The 5 year gilt yield. Opened the week at 4.32%, and then tickled down as low as 4.17% on Wednesday morning. Then - it just went up, up and up, and it closed the week at 4.588%. Context - about 40 basis points below the mid-2023 high for this bond - which was 4.98%. The last time it was this bad? August 2023. Thursday’s close on the swap was 4.148% on a close on the gilt of 4.459% - back to 30 bps of discount, but the curve is very flat, so I am not sure that will hold up for that long - although I expect demand to fall significantly for the 5-year swaps.
What does all this mean? Well, for a couple of weeks I’ve been saying “take the price” and right now you need to go back to pricing debt in the 6% - 6.25% for exit pricing on property purchases. This puts a LOT of deals in the bin, from experience over the past 3 years. Unlike my thoughts in much of 2022 and 2023, this time around there IS more logic in a 2-year fix at the same sort of price, defending for a better time. 2028 is also - in my view - a VERY good year to be considering a large refinance if you are holding a portfolio - because of political uncertainty in 2029. You don’t want to be having to act too close to THAT election, in my opinion, because the bond markets could get REALLY nervous if the polling is leaning in a certain direction. Either way, part of the attraction of Reform (no track record to show that they will just be the same as everyone else, overpromise and underdeliver, with a healthy amount of probable corruption) will not wash in the Bond Markets I don’t think. As for Polanski - that one will keep bond traders up at night. So I’ve got some restructuring and refinancing pencilled in for 2028, that’s for sure.
The 50-year bonds are above 5% yield for the first time I can remember. It’s certainly the highest close (5.134% yield) for over 20 years. I think they are likely a magnificent purchase, even if inflation in the shorter term makes that price look bad. I’d be stunned if you couldn’t trade out at a significant profit at some point in the coming months and years. But we aren’t here to gamble.
The 30s opened at 5.475% for the week and closed at 5.57% - so another 10 basis points the wrong way, but much less harsh than the 28 bps “lost” on the 5-year. Of course, because this is a shorter-term impact scenario, making the shorter term bonds a lot more sensitive.
UK yields have moved much more than US ones, and German ones. Why? Because all of this hits us hardest because of our percentage of importing. We are more sensitive to this inflation, because we have to “take the price” a lot more than other nations. Yields had already moved against us because of the result of the Gorton and Denton by-election - and if one little by-election is enough to spook the bond markets, imagine what 2029 will be like……you see my point. I seek to empower us all by getting us to plan what the tactics will be. Those who followed what I was doing in 2022 (fixing for 5) will be in an ideal position in 2027 to fix again for 5 (or longer) - and that cycle might well work in our favour, if these bond markets have settled down. If the Greens have a surge in the May elections - and let’s face it, they will gain council seats, Labour will lose them, Conservatives will lose them, and Reform will gain - it’s just about how much - yields will wobble further, potentially.
This, folks, is a time to be defensive. It MIGHT be time to just take a breath though, right now, and wait a few weeks - IF you are in position to still be OK if things go the wrong way. Why?
Look at those Truss time comparisons. The market is panicking a bit at the moment. We are in nowhere near as bad shape as 2022, just yet. The difference is that 2022 was self-inflicted, but at this point we have very little control (and - let’s face it - very little influence, although we have more if we stick with France and Germany). Trump’s got midterms to navigate, and his base were promised lower fuel prices - so this war from the US perspective has NOT got a lot of time in it, in my view. I expect more escalation and then some kind of further bizarre declaration of “Victory” (already lost count of how many times he’s “won” this one already, to be honest) which cuts through and calms prices down as Iran does what the rest of the world, including their allies, wants them to do. Just like Ukraine though - every day it goes on in the early phases adds days or even weeks to the probable length of the war. It’s either really fast, or it drags on - there’s not much in the middle ground (when you look at historical precedents).
So there could be some calm coming. Now isn’t the time for marginal deals, though. Anything marginal needs to be renegotiated, folks.
OK. That sets up the Deep Dive and there will be no surprise to know that first up, we look at the Bank of England meeting from this week. Then, a research piece that I commissioned (as you do these days, via Gemini of course) on the MFS bridging fraud situation and the up to date thoughts on what might come out of all of that - and what risks there are to the private credit and shadow banking sectors. We also look at the Bank of England Agents’ Summary of Business Conditions - these come from the horses’ mouths, from local business leaders via their regional reps and are valuable. Last up I thought we better strap the masks on extra tight and look at Generation Rent’s latest report on Energy Efficiency in the private rental sector. Hold tighter than usual, folks.
OK. The Bank of England minutes and summary. Remember - this isn’t a full, updated report, meeting. That comes in May.
On with the report and the Px take:
Theme 1: The Base Rate Freeze - Pausing at the Crossroads
The Summary: At its meeting ending on 18 March 2026, the Monetary Policy Committee (MPC) voted unanimously to maintain the Bank Rate at 3.75%. Prior to this meeting, there had been a trend of continued disinflation in domestic prices and wages. However, the emergence of a significant new global supply shock prompted the Committee to pause and reassess the medium-term outlook. Since the February Report, the market-implied path for the Bank Rate has increased significantly, leading to an overall tightening of financial conditions. The Committee concluded that holding the rate was appropriate while they gather more information on the scale and duration of recent geopolitical conflicts. All members stand ready to act as necessary to ensure inflation returns to the 2% target.
The Propenomix Perspective: I have been saying for months and years that the disinflationary glide path was never going to be a straight line, and here we are. So there’s eminent sense in holding rates right now - because of some of what I’ve said, and it is still very early days in the war. And so it came to pass - the market had got used to Dhingra and Taylor only ever voting downwards, but even they voted to hold rates this time out, and the 9-0 vote was a surprise to those who predicted a 7-2 as if those two vote on autopilot. I’ve said many times over the past few years - there are no idiots on the MPC (there are some who aren’t brilliant economists, sure, but that’s more at the top of the tree than in the externals). They know that today it is better to wait and see, as I suggested last week.
So - that’s an emphatic hold. The bond markets didn’t really like it - they’d have preferred a “pre-emptive hike”. There’s an argument for that, but bond traders move in fractions of a second - central bankers move in weeks and months. The hold was the “right” thing to do.
Theme 2: The Energy Shock and Inflation's Unwelcome Return
The Summary: The primary driver of the MPC's shifted outlook is the outbreak of conflict in the Middle East involving Israel, the United States, and Iran. Attacks on vessels have caused shipping through the Strait of Hormuz to almost grind to a halt. Consequently, the Brent crude spot price surged to over $100 per barrel, representing a 60% increase since the February Report. European wholesale gas prices also spiked by around 60%. Because of these direct effects, Bank staff now expect CPI inflation to rise to close to 3.5% in March, and potentially remain around that level in the third quarter of 2026. The MPC is particularly alert to second-round effects in wage and price-setting, which could become embedded if higher energy prices persist.
The Propenomix Perspective: Just when you thought you could safely look at your utility bill again, global geopolitics has entered the chat. Brent crude blasting past $100 a barrel is a massive headache for everyone, but particularly for a UK economy that relies heavily on imported energy. The Bank's expectation that CPI will bounce back up to 3.5% is grim reading. What does this mean for property? Operating costs for massive portfolios, particularly block management and commercial spaces, are going to sting. But the real danger is the "second-round effects" the MPC is sweating over. If inflation expectations de-anchor again, wage demands will spiral. Real estate has traditionally been an inflation hedge, but only if you have the pricing power to push rents up. Given the current squeeze on tenant affordability, relying on endless rent hikes to cover your soaring operational costs is a fool's errand.
Theme 3: The Mortgage Market and Tightening Financial Conditions
The Summary: The geopolitical shock has led to increased volatility and a deterioration in risk sentiment across financial markets. While it is too early for the Committee to assess the full impact on bank lending conditions, Term Overnight Indexed Swap rates have already increased to levels previously seen in early 2025. As a direct consequence of these shifts in the wholesale money markets, some mortgage lenders have already increased the interest rates quoted on new mortgage products. Despite the Bank Rate remaining on hold at 3.75%, the overall tightening of financial conditions reflects the market recalibrating the balance of risks to the path for the Bank Rate.
The Propenomix Perspective: Here is the harsh reality of how capital markets actually work - you do not need a Base Rate hike to see your mortgage costs jump. The Base Rate was held at 3.75%, but the damage was already done in the swap markets. Term Overnight Indexed Swap rates spiking back to early 2025 levels is the real story here. Lenders are not charities; the second their hedging costs rise, they pass the pain directly onto borrowers. We are already seeing lenders pull their most competitive products and re-price upwards. If you were sitting on your hands waiting for a magical sub-3% fixed rate to appear this spring, you have been rudely awakened. This environment separates the professionals from the amateurs. You must stress-test your portfolio against these tighter financial conditions, because the cavalry - in the form of meaningful rate cuts - is not coming anytime soon.
Theme 4: Stagnant Growth and the Real Economy Squeeze
The Summary: The new energy price shock is occurring while the UK economy is operating with a margin of spare capacity and growth remains below potential. UK GDP expanded by just 0.1% in the fourth quarter of 2025. Activity remained subdued in the first quarter of 2026, with monthly GDP flat in January. Furthermore, labour demand has remained weak, with employment growth staying subdued. The MPC notes that increases in household fuel and utility costs will squeeze real incomes. This could cause consumer confidence to deteriorate, precautionary saving to rise, and potentially lead to a more rapid or larger rise in unemployment.
The Propenomix Perspective: Let us strip away the central bank jargon - the real economy is virtually flatlining. GDP growth of 0.1% is just a rounding error away from a recession. The Bank notes that labour demand is weak, yet they are terrified of wage inflation. It is a massive contradiction. We are staring down the barrel of stagflation - prices rising while the economy goes nowhere. I first used the word “Treacle” to describe this economy in 2023 and we’ve just had a wholesale delivery of Golden Syrup. For the property sector, a squeeze on real incomes is the ultimate headwind. Tenants are going to be hammered by higher utility bills, which directly limits their capacity to absorb rent increases. If unemployment also ticks up further, as the MPC NOW fears it might (too little, too late), arrears will become the number one issue for landlords. Capital growth is off the table in a stagnant economy. Your sole focus right now needs to be on yield, cash flow preservation, and retaining high-quality tenants who can weather this macroeconomic storm.
OK. Not great news, I know - but the Supplement delivers the truth, not paracetamol when you have a headache. Next up - the MFS situation, as per my deep research prompts via Gemini - summarised here for everyone.
Theme 1: The Mechanics of the MFS Black Hole
The Summary: Market Financial Solutions (MFS), a prominent Mayfair-based bridging lender, formally entered administration in February 2026. The insolvency has exposed a catastrophic financial shortfall estimated between £1.3 billion and £1.7 billion. Forensic analysis indicates that only 19.8% of a specific £1.16 billion collateral tranche held true, unencumbered value. At the core of the collapse are allegations of systematic "double pledging". MFS allegedly exploited the legal distinction between equitable and legal assignments. By failing to perfect legal charges at the Land Registry, the firm was able to use the exact same property assets to secure multiple warehouse funding lines from different institutional lenders simultaneously. Furthermore, MFS operated largely outside wider financial regulatory scrutiny, being supervised by the FCA solely for anti-money laundering compliance.
The Propenomix Perspective: I have been warning about the opacity of these shadow banking structures for years. The sheer arrogance of institutional capital here is staggering. You have elite Wall Street risk committees writing nine-figure cheques based on equitable assignments, entirely skipping the fundamental legal perfection at the Land Registry to save a few quid on administrative friction. They prioritised "deal velocity" over basic due diligence, effectively treating an unregulated originator's spreadsheet as an unquestionable gospel. It is a classic case of chasing yield in a 5% interest rate environment while entirely forgetting the underlying mathematics of risk. The idea that an FCA registration for money laundering equated to a seal of operational approval is laughable. This is not just a fraud story; it is a profound embarrassment for private credit, proving that without active, on-the-ground verification, your collateral is just a polite fiction.
Theme 2: Private Credit Contagion and Institutional Exposure
The Summary: The MFS failure has triggered a severe contagion event across the global private credit and investment banking sectors. Court filings and market intelligence reveal massive institutional exposures, including £500m to £600m for Barclays, £400m to £500m for Apollo, and significant material exposures for Jefferies and SMBC. The crisis is compounded by the January 2026 collapse of Century Capital, another London bridging lender, which left the US asset manager Blue Owl Capital with a £36 million exposure to subordinated debt. Furthermore, in the exact same month that Barclays froze MFS accounts due to transaction anomalies, Citigroup controversially approved a £100 million credit facility for Interbridge Mortgages, a firm where the MFS founder, Paresh Raja, retains a 40% stake. These cascading events have exposed the "liquidity mirage" inherent within heavily leveraged private credit structures.
The Propenomix Perspective: The great private credit reckoning has arrived, and it is a bloody mess. The MFS and Century Capital implosions are the ultimate "cockroach events" - if you see one, there are undoubtedly dozens more hiding in the warehouse facilities. Mega-funds have spent the last five years blindly acquiring legacy assets through aggressive M&A, unwittingly importing toxic, poorly underwritten loans deep into their balance sheets. The Citi-Interbridge anomaly is particularly galling. It demonstrates a catastrophic failure of cross-institutional due diligence, where the left hand is freezing accounts while the right hand is authorising £100 million facilities to connected entities. When the geopolitical shocks hit and the illusion of liquidity vanishes, these highly leveraged houses of cards simply evaporate. The contagion is real, and the capital destruction is entirely self-inflicted.
Theme 3: The Prime Central London Liquidation Shock
The Summary: To recover the monumental creditor shortfall, administrators from FRP Advisory are preparing to forcibly liquidate over 250 property companies directly linked to the MFS loan book. This portfolio is densely concentrated in high-value Prime Central London (PCL) districts, including Mayfair, Belgravia, and Knightsbridge. This sudden influx of luxury supply is colliding with a sharply contracting PCL market. Average prices in prime central London had already fallen by 4.9% in the year to February 2026. Market sentiment has been severely dampened by the threat of wealth taxes and the abolition of the non-domicile tax regime. Consequently, the historical "London Premium" has transitioned into a "London Penalty", with transaction activity for properties above £5 million remaining a third below pre-pandemic levels.
The Propenomix Perspective: We are about to witness the greatest forced fire sale in modern London history. The timing could not be worse for the sellers, but it is an absolute gift for the true institutional allocator. PCL is currently paralysed by political noise and a punitive fiscal environment that has sent the ultra-wealthy fleeing to jurisdictions like Dubai (although I have it on good authority, and it won’t surprise you, that that’s not exactly the destination of choice at the moment and has its own woes with losses of 30% or more - but 70% of the market is primary, new build, as I found out this week!). You cannot dump 250 stucco-fronted mansions and luxury riverside apartments onto a market where buyer demand is already evaporating without causing a brutal downward price correction. The era of buying a Mayfair asset and passively watching it appreciate via the magic of zero-interest rates is definitively dead. However, for un-leveraged, professional capital sitting on dry powder, this distress is a generational acquisition opportunity. If you can buy at the true clearing price - not the inflated MFS loan book fantasy valuations - the yields will finally start to make mathematical sense.
“Great” - back to the Bank - but this time, the Agents’ Summary of Business Conditions.
Theme 1: The Macro Landscape - A Lacklustre Economy and Squeezed Consumers
The Summary: The Bank of England's latest intelligence describes the overall economic picture as lacklustre, with contacts remaining cautious in their expectations for real activity. Consumer demand for goods remains subdued, with sales growth primarily driven by price inflation while actual volumes continue to grow slowly. Furthermore, there is little evidence of a consumer spending rally so far this year. The outreach engagement reveals that the high cost of living continues to be a key theme, with many participants feeling that the official inflation rate does not reflect their lived experience. Food costs remain a major concern, and many individuals say they have reached the limit of what they can absorb financially. Consequently, younger adults and students are reportedly increasingly reliant on overdrafts, credit cards, or buy-now and pay-later services just to make ends meet.
The Propenomix Perspective: The headline figures tell us that underlying consumer price inflation is expected to continue to ease. But let us look at the reality on the ground. When the official data says inflation is falling, the person on the street still feels like everyday prices are rising much more quickly. And they are entirely right to feel that way. Prices are not dropping; they are just going up slightly less rapidly than before. When charities report that debt issues have shifted from consumer credit to essential living costs like rent arrears and council tax, it tells me the consumer base is fundamentally exhausted. We are seeing a retail market sustained purely by inflation, not by actual volume growth or increased prosperity. You cannot build a robust economic recovery - let alone a booming housing market - on the back of households maxing out credit cards to buy basic groceries. Remember - this report has been put together with data up until mid-February - so it already looked stagnant before the geopolitical shift.
Theme 2: Construction Stagnation and the Delayed Recovery
The Summary: Construction contacts have become more downbeat, with expectations of a recovery now pushed out into early 2027. The decline in construction output in the same period last year has accelerated. This is attributed to weak demand, high build costs, uncertain funding, and ongoing planning and regulatory delays. Private housebuilding output continues to fall as developers slow or pause new schemes, particularly in London. Furthermore, new commercial projects remain scarce, with office schemes largely halted on viability grounds. Contacts expect that any recovery in construction-linked manufacturing will be delayed until late 2026 or early 2027. Investment in buildings is often on hold due to higher construction costs making projects less viable, or due to planning slowing down the process.
The Propenomix Perspective: This is exactly what I have been warning about regarding the structural undersupply in UK property. The fact that developers are pausing new schemes due to high costs and poor viability is a massive red flag for future housing delivery. We have a perfect storm of elevated construction and financing costs colliding with a totally dysfunctional planning system. If you are waiting for a sudden flood of new stock to cool the housing market, you will be waiting a very long time. The supply pipeline is effectively blocked. Builders are cutting starts or simply building to order. When the fundamental cost of putting bricks in the ground outweighs the end value, the cranes stop moving. This guarantees that whenever demand does properly return, we will be facing an even more acute supply shortage, which will inevitably put upward pressure on the existing stock. Again - this changes for the worst with suppliers already putting prices up on building materials and reviewing those costs weekly.
Theme 3: The Polarised Property Market
The Summary: Housing and commercial property markets remain subdued overall, but sharp regional and quality-based divergence persists. Housing activity is weakest in London and the South, where prices are falling and transactions have stalled. Conversely, Northern regions and Scotland report firmer activity and modest price growth. In the residential rental sector, markets remain tight, although rental inflation is moderating. Landlord numbers are shrinking, which is pushing some renters towards becoming first-time buyers. The commercial real estate market is equally polarised, with strong occupier demand and rising rents for prime, environmentally sustainable assets in central locations. Meanwhile, secondary assets face rising vacancies and falling rents.
The Propenomix Perspective: The regional divide is starker than ever. Northern regions and Scotland are showing modest price growth while London stalls out. This makes perfect sense when you look at affordability and where investment yields still actually work against higher swap rates. But the most telling data point here is the shrinking number of landlords. The systemic assault on the private rented sector - through tax, regulation, and higher borrowing costs - is working exactly as intended, driving capital out of the market. The irony is that while this pushes some renters to buy, it leaves the remaining tenant pool fighting over a diminishing supply of homes, keeping rental markets exceptionally tight. As for commercial real estate, it is a rapid flight to quality. If you own secondary office stock right now, you are looking down the barrel of falling rents and empty buildings. The environmental premium is real, and the obsolescence risk for older assets is accelerating.
Theme 4: The Employment Squeeze and Corporate Margins
The Summary: Employment intentions remain slightly negative this round. This reflects weak demand, higher labour costs, and increasing automation. The latest intelligence suggests wage settlements will average 3.6% in 2026, which is lower than the 4% average reported for 2025. However, many businesses continue to report squeezed profit margins. This is occurring because subdued demand has limited the ability of firms to pass on higher costs into their pricing. To cope with these pressures, organisations are increasingly turning to automation and artificial intelligence, which are allowing them to meet demand without additional hiring. For some large professional services firms, this is contributing to reduced demand for early-career recruitment.
The Propenomix Perspective: We are witnessing a massive structural shift in the UK labour market. Businesses cannot pass their rising costs onto exhausted consumers , so their profit margins are being absolutely crushed. The only logical response is to slash overheads. It is no surprise that employment intentions are drifting into the negative. What fascinates me is the rapid adoption of automation to plug the productivity gap. Firms are figuring out how to do more with less because they simply cannot afford to hire. Wage settlements might be dropping to 3.6% , but when your top-line revenue is essentially flat, any increase in your cost base is incredibly painful. This creates a difficult environment for commercial property demand - if companies are not hiring graduates and are reducing their headcount through natural attrition, they simply do not need more desk space. It all points back to a defensive, cautious market where survival and operational efficiency are the only games in town.
Last up - Generation Rent’s report on “Raising Standards, not Rents”. Remember, folks - information is power, and keep your friends close……
Theme 1: Fuel Poverty and the EPC Gap
Summary: Private renters in England and Wales are living in the worst quality and least energy efficient homes. According to the 2024/25 English Housing Survey, 51% of private rented homes currently meet EPC C or above, whilst 37% fall in Band D and 9% in Band E. Poor energy efficiency ratings have a major impact on households' energy bills. Analysis shows that a household living in a Band E home will spend close to £500 per year more on energy than a household in EPC C. Official figures show 21.5% of private renters in England are currently experiencing fuel poverty. Furthermore, polling reveals that 42% of private renters in England and Wales regularly struggle to pay their energy bills.
Propenomix Perspective: Let us look at this with a cold dose of reality. Generation Rent is entirely correct that heating old British housing stock is a miserable, expensive affair. However, the narrative that landlords are simply hoarding cash while tenants freeze misses the macroeconomic picture entirely. We are dealing with chronic supply constraints across the entire housing market. When demand outstrips supply aggressively, tenants lose the ability to vote with their feet and avoid poorly insulated stock. The premium for energy efficiency is real, but retrofitting Victorian terraces is exceptionally difficult. If we actually built enough homes to satisfy demand, older, inefficient properties would naturally face a discount in the market or be forced into modernisation. Instead, we have a system where any roof is better than no roof - a direct consequence of decades of structural under-building, not just landlord apathy.
Theme 2: The £10,000 Cost Cap and Exemptions
Summary: The government's stated ambition is that all private rented homes meet EPC C by 2030. In its 2025 consultation, the government initially proposed that the maximum a landlord should spend on bringing a home up to EPC C should be £15,000. However, the government has decided to reduce the landlord cost cap by a third to £10,000. The landlord may register the property for an exemption valid for 10 years if the work costs more than this threshold. For homes worth less than £100,000, the cost cap will be set at 10% of the property's value. These exemptions add up, leaving around 707,000 homes without upgrades. Consequently, 578,000 households will remain stuck in fuel poverty.
Propenomix Perspective: I find the outrage over the £10,000 cap rather amusing. From an investment strategy perspective, the government's retreat from the £15,000 cap was an absolute necessity. Consider a landlord holding a £70,000 terraced house in the North East - demanding a £15,000 capital expenditure is financial suicide. It completely wipes out the yield for years. With gilt yields hovering where they are, and alternative risk-free returns readily available, forcing that level of unrecoverable expenditure would trigger a mass sell-off. The 10% value cap makes complete economic sense (or is still too high!). Generation Rent bemoans the 707,000 homes left without upgrades, but if those landlords exit the market, those tenants are not magically buying the properties - they are joining the queue for an ever-shrinking pool of rental stock. Capital goes where it is treated best, and a £15,000 forced expenditure was a remarkably quick way to chase it away.
Theme 3: Rent Hikes, Evictions, and Proposed Controls
Summary: Landlord lobbyists have claimed that they will have no choice but to hike rents after retrofit work. The report counters this by noting that just 41% of landlords declare mortgage interest payments on their tax returns, indicating around 58% have no borrowing on the homes they own. Analysis of First Tier Tribunal decisions shows average rent discounts of £211 per month for EPC D homes, rising to £673 per month for EPC E homes. To protect tenants, the report recommends limiting rent increases to the lower of Consumer Price Inflation or wage growth. Furthermore, it suggests introducing a protected period from 'landlord need' evictions for two years after a government grant or loan is used to fund retrofit work.
Propenomix Perspective: Here is where the report ventures from highlighting a genuine problem into absolute economic fantasy. The suggestion to cap rent increases at the lower of CPI or wage growth is a backdoor rent control - and we all know how that ends. A catastrophic collapse in supply. The assertion that because 58% of landlords have no mortgage borrowing, they should simply absorb £10,000 in capital expenditure without adjusting the rent defies basic yield mechanics. Whether an asset is leveraged or unencumbered, investors expect a return on capital deployed. If you force an upgrade and cap the income, the maths fails. Look at the SONIA swap rates - money is not free. If landlords cannot realise a return on their retrofit investment, they will either use the exemptions, sell the asset, or simply exit the sector entirely. You cannot mandate private capital into a loss-making position and expect it to stick around. At the moment - they’ll just buy a 30 or 50 year bond, directly or indirectly - and who could blame them at 5%+ without the hassle, the abuse, and all the rest of it.
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. Early bird pricing is still available with a 10% discount! 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 finish our super Golden Quarter together - it is a case of “here we go” in my opinion.