"Nature, to be commanded, must be obeyed." - Francis Bacon
This quote goes straight to the heart of this week’s deep dive when we get into flooding risk over the coming decades, aside from anything else.
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 - once again deals already “done” are back on the table. This week - the EPD (US/UK “Economic Prosperity Deal”) is back under the microscope (100,000 passenger vehicles going into the US at “only” a 10% tariff) unless the UK provides more “defensive” military support in the Gulf. Starmer, to his defenders (who are few - but think James O’Brien on LBC, that sort of character), is “not being bullied” here. So let’s see. I would find it impossible to negotiate with Trump’s team, to be honest, because a deal “done” is never done, it is ALWAYS there for renegotiation. They have all the power, and it must be a tough job. I’d end up just telling them - when we can do a deal we can stick to, rather than you wanting to change it to your every whim, give me a ring - until then, let’s not bother wasting each other’s time. More because I just wouldn’t know what to do other than that, rather than it being a great negotiating tactic!
It isn’t easy here for the UK. Far less influential than when Afghanistan started, or when the Iraq war(s) kicked off years ago……it seems sensible to use our near international irrelevance to stay out of the way of the target of the inevitable terrorist response that will occur on the back of this current conflict. More hate, more division - these will be the by-products of course. A horrible prediction, but not a difficult one to make.
NATO is of course being completely bastardised by Trump here - ultimately, a bit like a martial art, set up for defence, NOT for offence - and I don’t think anyone can defend the case that this is defensive. It’s the most front foot defence anyone could ever imagine. Half a billion dollars worth of investment between the UK, France and Germany announced this week tells you where they think the money needs spending in short order - hypersonic and long-range weapons. Deterrent, and a hedge away from US reliance, although to the US a half-billion is just a rounding error when it comes to defence (or anything, to be honest).
The UK wants to stick to minesweeping and a drone-led task force and do a “bit” in terms of the policing of the Strait of Hormuz. Sounds incredibly difficult to me, and surely traffic through there won’t get back above 20% (or even there) during the meat of this conflict - it will be an incredibly expensive way to do business. I heard this week that Dubai hotel occupancy was sitting around 3% (no typo) - normally at this time of year it would be 85%-90%. My resident expert tells me he thinks 10 years before this conflict “blows over” from the UAE perspective - very well framed, the point was there are 2 reasons to move to Dubai - the tax position (widely spoken about) and the safety perspective (I have heard this often cited by those who have moved there). The latter - certainly the perception of it, which is more important than the reality in many ways - has endured significant long-term damage.
One second-order consequence to consider - the international money that was flowing into Dubai property is back on the international market, with the UK being a potential destination for it. Expect more overseas investment to come back towards the UK market on the back of all of this - the perceived stability of the system (and simply Starmer having staying power, even if he isn’t very good) - is highly attractive compared to the geographical and geopolitical issues in the Middle East.
This week also saw a gun to Rachel Reeves’ head over the digital services tax. Retaliatory tariffs again. Repeal or “substantially modify” within 30 days or face the consequences on Scotch, cosmetics, ceramics. Now this one is easier - simple, if that costs the economy money on retaliation, the tax goes up not down. Trump Always Chickens Out. 2% is laughably low for the digital services tax given the effective tax rates that the tech giants DON’T pay thanks to creative VAT solutions, let alone corporation tax - double the blinds, instead, would be my response. “We will have to get back the lost tax revenue from somewhere, and will look to the digital services tax to do so”. It’s the only one the companies can’t avoid - and then the tech bros put the pressure back on Washington. What’s not to like? Pick your spots and go and knock out the biggest kid in the gang, and the rest fall into line? Risky, but being a patsy is also risky.
The last threat of the week - being demoted to “Tier 2” NATO status for the UK, compromising access to intelligence because the UK hasn’t danced to the US’s tune in this war. The amount of lasting diplomatic damage being done during this administration will stay with us all for all of our lifetimes.
We retreat, one more time, to the safety of the UK real-time property market. Chris Watkin’s analysis/roundup of week 11 of the UK Property Market. Chris “runs” Sunday to Sunday, so this was the week ending 22nd March. We outrun 2025 listings one more time - (401k on the market so far is 1.3% above 2025 and 19.4% ahead of the pre-pandemic 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.
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 total 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 272k SSTC YTD, 7.8% higher than 2024 but 5.3% lower than 2025. 17.4% ahead of the 2017-19 pre-covid market. 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 7.5% ahead of 2024, at 192k. 14% ahead of the 2017-19 market, and 22.7% ahead of 2023 which as we know was “limp lettuce” territory all year. 2.8% 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 23.6k 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 per sqft, 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 psqft, which is a big move down from £348 psqft 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!
Last full week of March, and macro-wise, we have the flash PMIs, February’s Inflation Report, and then I think it is important to look at the Consumer Confidence figures because they are particularly “real-time” as well and the situation has been very fast-moving over March, and of course for pudding we have the gilts and the swaps, as usual (that slot isn’t going anywhere before 2030, you can guarantee that).
Regulars know how much I love the PMIs for their real-time snapshot approach. The data here was collected between 12th and 20th March 2026. Very up-to-the minute and when the markets had already made significant adjustments due to the Iran/Israel/US situation.
Not MANY surprises then when we hear, after a great start to the year on the PMIs, that we hit a 6-month low. Perhaps surprisingly it wasn’t lower than that. Both Manufacturing and Services somehow stayed above the 50-handle, which was a surprise to me. It’s been a month with swift movements and the key parts to pull out were summarised, as usual, by their Chief Business Economist, Chris Williamson.
War is the second word in his quote for the month, unsurprisingly. Stalling growth, pushing inflation upwards is the message. The direct loss of business was either thanks to more risk aversion, surging price pressures, higher interest rates, or direct logistical/supply chain disruptions. Or a combination thereof.
The acceleration in the cost base in the manufacturing sector - quote of the report this month - was the sharpest since the depreciation of sterling after Black Wednesday in 1992. A 34-year significant event.
He limits his speculation, as I have, on the duration of the conflict - but, as I have, he speaks of how the duration will be key in terms of setting the long-term expectations and consequences. He always concludes by telling the Bank of England what to do, and he seems to know he’s swimming against the tide here (he’s always pushing for lower rates) - he speaks of balance between growth and inflation risks when setting policy. However, as he well knows, that isn’t the Bank’s mandate - their mandate is to control inflation. So we won’t hear Chris pointing out that the best guess for the Base Rate by the end of 2025 is 4.5%, according to the overnight markets - but I’m duty bound to point it out to you again, whether I (or you) like it or not!
Nasty business, but still contained - a point I’ve made about the war since it began. No, it isn’t 1992, 1973, 2022, 2020 or 2008. It is far from ideal - and we don’t yet understand the full consequences - but a crisis, as yet, it isn’t. It most definitely still brings economic pain to nearly every household, regardless of their position and situation - but as always, the ones that can afford it least will take the most relative pain.
Inflation and the February report. This will be a strange one, because of course it feels like much, much more than a month ago. The reality is that it feels somewhat meaningless - but nevertheless, there’s often a bit of gold in the hills when we get into the report. Expectation for CPI? 3%, same as January. Number printed? 3%. This is pre-war of course. CPIH, which the ONS prefers, printed 3.2% again. OOH - which we’ve watched very closely - the owner-occupier housing costs component which is added to CPI to get to CPIH (it makes up about 18% of CPIH) - 3.8%, clipped down 0.1% from January. Soon to be on the way up again, although thanks to energy costs rather than rents - and we are 4 months away from that event as the price cap for April had already been set.
Rules of thumb - from 2015 - CPI up 40.1% since then, OOH up 37.4% since then - cost of housing up less than the headline rate of inflation over those 11 years. Worth noting and remembering.
Here’s a paragraph that will change somewhat in next month’s report……the price of petrol fell by 1.6p per litre between January and February 2026, and the price of diesel fell by 1.4p per litre. You know what’s coming.
CPI Services was down at 4.3%, the lowest since March 2022. But still 4.3%. I’ve been talking about this being so far above target, and sticky, for years now. Now next month’s report will see this likely going back up again.
It’s all a look in the rear view mirror that is of limited value at this point because of the Iran situation, but still, important to monitor the progress (or lack of it) back towards the 2% target having lost control over 4 years ago now (it was May 2021 when inflation breached the 2% target at 2.1%, so nearly 5 years ago - 3.2% came in August 2021 and above the 3 handle is outside of the comfort zone - we first went above 5% in November 2021 in this cycle, for completeness).
OK. Confidence. Have you got any? And what did the consumers say? We had checked in last month, as we hadn’t looked for a while, and got a miserable -19 print - the deterioration by only 2 points was a surprise to me as it printed -21 in March, but that is 5 points off where it was in January. Context is important.
Consumers see their personal financial situation as only 1 point worse off over the next 12 months, although that’s again 5 points off January’s number. They see a 6 point loss in the General Economic Situation over the coming year. Major purchases have dropped significantly in terms of intent - and indeed I’d expect the savings ratio to come right back up, at the cost of consumption and businesses. Time to hoard cash.
The savings index, however, printed 28 in January, 21 in February, and was only back to 27 in March. A big swing - March 2025 was 25, though, for context.
The average consumer seems to be pretty sanguine - yes, no-one wants to spend more on gas, electricity or fuel, but the real life impact of that versus every other piece of consumption these days is limited, for the majority. What do the compilers, GfK, say about it?
“With growing concerns over further sharp price rises in the coming months, unless there’s a swift resolution to the conflict, or government schemes such as additional support with energy bills come into fruition, this ripple of fear we are seeing in the March data has the danger of turning into a flood.” - that’s from Neil Bellamy, the Director of Consumer Insights at GfK. He, like me, looks like he was expecting a worse print on this index. Data was collected between 2 and 16 March, so again, a representative sample although confidence has likely continued to deteriorate since 16th March.
Now the section we’ve been dreading after the March we’ve had - firstly, it was a DOWN week on the yields! The open after the weekend was a tick up - Monday’s 5-year gilt yield was 4.649%. The close was 4.538%. Now we closed at 4.588% last week, so we are 5 bps shorter than that, but 11bps off on the week. We again tested 4.78% on Monday before some soothing words from the Donald seemed to cheer the markets up - but the watchword is still volatility, which the lenders don’t like. The yield curve is still very flat around 4.5% out to 7 years of duration, although the 1-year bond has calmed down quite a lot.
The 30s looked different. They barely moved, down just 1 basis point on the week to close at 5.584%. The 50s stayed at 5.125%, again not much change. No fun, but a stem of the bloodletting, for the moment.
At this time, the 5-year swap closed at 4.224% on Friday, with 31.5 bps of discount built in compared to the gilt yield - so 6% or so is about as cheap as you will get some limited company buy to let financing at the moment. I’ve no choice in my operation to cost my term debt at 6% for deals on the table at the moment. It’s a right deal-killer, I must tell you. So - as with some of the past few years - we are pushing seemingly harder than ever on pricing.
12 months ago that swap was 4.032% - so we are “only” a quarter of a percent worse than last year. One month ago, however, it was 3.475%!!
So what’s the current state of play on the interest rate? Everyone keeps asking, of course. Base was set to be 3.25% (approx) by end 2026, last month. Now it looks set to be 4.5% (approx). Mortgages are up 0.75% on where they were in February - but only 0.25% above where they were 12 months ago, and still 0.25%(ish) cheaper than their most expensive stretch in mid-2023. The market isn’t going to fall apart, but the models need to be updated…..pricing is likely to go sideways but that means continuing downwards in markets that were already falling (London etc.). Base rate’s next move, as it sits now, is likely up 0.25% at the May meeting. All this is, of course, subject to change but if the war ends today, it doesn’t all go back to normal - there is disruption to handle. The more it goes on, the more disruptive it is for longer.
OK. Enough macro - over to the deep dive. Four very different reports this week, from the broad to the specific. We start with the UK Housing Review from the Chartered Institute of Housing. Widely regarded as a key report for policymakers - seriously impactful. Then the National Audit Office report published this week regarding their investigation into shared ownership. I’ve been critical of the model in the past and I’m looking forward to the NAO take on the facts here. Then, the Resolution Foundation looks at the impact of Britain’s current mortgage lending rules (with a bias towards families on lower incomes, they will inevitably say they are too tight post-crisis; let’s see if they have a point). Last up, a longer-term strategic issue - from Public First, a report entitled Flooding the Market: The Climate Mortgage Trap. A long-term (2050) look at the 8 million (yep) homes at risk due to climate change (or more accurately - increased rainfall and higher sea levels).
Straight in with the UK Housing Review, then.
Theme 1: The Rise of For-Profit Social Housing
Summary: For-profit registered providers (FPRPs) are a small but rapidly growing element of the social housing sector in England. According to the UK Housing Review 2026, 64 FPRPs now own over 46,500 homes, with 58 per cent dedicated to low-cost homeownership and 42 per cent to rent. Ownership is highly concentrated, with the seven largest entities holding 80 per cent of the stock. Backed by major institutional investors such as Blackstone and pension funds, these providers aim to generate inflation-linked returns and capital appreciation. While they offer a new avenue for equity finance in an increasingly stretched not-for-profit sector, the report highlights potential regulatory challenges. Specifically, concerns remain around the long-term stewardship of these assets and what happens when investment funds seek exit strategies, potentially transferring stock out of the regulated social sector.
Propenomix Perspective: Let us be absolutely clear - the not-for-profit housing sector is financially exhausted. When you have major associations struggling with fire remediation costs, Awaab's Law, and the march to net zero, their capacity to service new debt is shot. Enter the private capital cavalry. The regulator might fret about exit strategies and whether Blackstone cares about social value, but the reality is we need their equity. Traditional debt funding is too expensive with SONIA swap rates where they are. These for-profit vehicles are nimble, they buy up section 106 stock that legacy providers cannot afford, and they actually build. However, anyone thinking this is a philanthropic exercise is naive. These funds want their 5 to 10 per cent internal rate of return (a drastic haircut on their typical IRR requirements), and if the numbers stop making sense, they will look for the door. The government needs to wake up and shape this market before it dictates terms to them.
Theme 2: The Health Toll of Poor Housing
Summary: The UK Housing Review 2026 identifies housing affordability and quality as apex determinants of national health. High housing costs and precarious tenancies have forced many households into substandard living conditions, contributing to a measurable decline in healthy life years and exacerbating NHS pressures. The report estimates that poor housing conditions, particularly cold and damp homes, cost the NHS £1.4 billion annually in England alone. The private rented sector is disproportionately affected, with over one in five properties failing the Decent Homes Standard. Furthermore, housing insecurity and the threat of eviction are directly linked to chronic stress, depression, and accelerated biological ageing. The Review calls for a holistic policy approach that integrates public health outcomes into housing strategy, alongside a reversal of frozen local housing allowance rates which continue to drive overcrowding and financial hardship.
Propenomix Perspective: The headline number of £1.4 billion in NHS costs from cold homes is shocking, but frankly, it is a gross underestimate. When you factor in lost productivity, mental health interventions, and the sheer cognitive load of housing stress, the true economic drain is colossal. The state has essentially outsourced its social safety net to private landlords, then hammered those same landlords with tax hikes and regulatory burdens. What did they think would happen? Rents spike, standards slip, and tenants pay the price with their health. We have a fundamental supply constraint meeting a wall of demand, and freezing the local housing allowance is the policy equivalent of sticking your fingers in your ears. If we want to fix the health crisis, we have to fix the housing supply deficit. You cannot prescribe pills for a damp flat.
Theme 3: A New Generation of New Towns
Summary: Eighty years after the post-war Labour government initiated its new towns programme, the current administration is reviving the concept to address chronic housing shortages. The New Towns Taskforce has recommended 12 potential sites across England, including standalone settlements and urban extensions, with the capacity to deliver between 250,000 and 300,000 homes. These developments will be guided by ten placemaking principles, emphasising ambitious densities, 40 per cent affordable housing, and strong transport connectivity. The strategy relies heavily on the establishment of modern development corporations with robust planning and land acquisition powers. Crucially, the taskforce argues that control of key strategic sites and upfront public funding for land assembly will be vital to master-plan these communities effectively and capture land value, ensuring the necessary social and economic infrastructure is built alongside the housing.
Propenomix Perspective: The romance of the post-war new town is a lovely political soundbite, but executing it in the 2026 economic climate is a different beast entirely. Do not get me wrong - building at scale via development corporations is the only structural way to smash through the 300,000 homes a year target. But let us look at the mechanics. You need upfront capital to acquire land and put in the infrastructure. With gilt yields stubbornly high and the Treasury terrified of borrowing, where is that initial public funding coming from? The government intends to lean heavily on private investment, but developers will not build out at pace if it tanks local absorption rates and crushes their margins. The taskforce is right to demand strong compulsory purchase powers, but unless the state is willing to take on massive initial balance sheet risk, these 12 utopian sites will remain nothing more than colourful master-plans on a Whitehall desk.
Theme 4: The Budget Reality and Taxation
Summary: The macroeconomic environment continues to suppress housing delivery, with the Chancellor's Autumn Budget presenting a mixed picture for the property sector. While the government committed £39 billion over ten years to the Social and Affordable Homes Programme, it simultaneously introduced significant tax increases. A new high-value council tax surcharge - widely termed a mansion tax - will apply to properties worth over £2 million in England from 2028. Additionally, the Budget raised the tax on rental income by two percentage points across all bands. The UK Housing Review warns that successive tax interventions aimed at private landlords risk reducing the supply of rental properties over the long term, potentially driving rents higher if demand continues to outstrip supply. Meanwhile, broader economic stagnation and elevated borrowing costs continue to challenge both developers and prospective buyers.
Propenomix Perspective: Here we go again. Another budget, another short-sighted raid on the private rented sector. Hiking the tax on rental income by another two per cent is not an economic strategy - it is pure political theatre. The Office for Budget Responsibility itself admits this will constrain rental supply. We already have a chronic shortage of available lettings, and chasing landlords out of the market only guarantees that rents will surge further. As for the so-called mansion tax, it is a clunky bolt-on to an already broken council tax system. Valuations are going to be a nightmare, and the revenue generated will be a rounding error in the grand scheme of the Treasury's black hole. We desperately need a holistic overhaul of property taxation that incentivises development and efficient use of stock. Instead, we are getting a patchwork of punitive levies that will ultimately be paid for by tenants and buyers navigating an increasingly distorted market.
Next up - shared ownership. What does the National Audit Office say about it?
Theme 1: The Affordability Illusion & Escalating Costs
The Summary: Shared ownership offers a route into home ownership for eligible buyers unable to purchase on the open market. Buyers purchase an initial share, often between 10% and 75%, and pay rent on the remainder to a shared ownership provider. While initial affordability is generally understood, long-term financial risks are less obvious. Shared owners are responsible for paying 100% of all service charge costs, regardless of the size of their ownership share. Service charge increases, alongside rent adjustments, can create severe affordability pressures over time. The Levelling Up, Housing and Communities Committee highlighted extreme cases, such as service charges increasing by up to 170% over a two-year period.
The Propenomix Perspective: Let us be absolutely clear here - shared ownership is a highly geared financial product masquerading as a social good. The initial affordability hook is entirely superficial. If you own 10% of the equity but carry 100% of the maintenance and service charge liability, you are effectively a tenant underwriting the operational risk of a housing association. When you factor in sticky service sector inflation and spiralling building insurance premiums, the reality on the ground is grim. We are seeing real-term living standards squeezed, yet the model insists these households absorb unlimited variable costs. The government index might suggest rents are somewhat controlled, but service charges are the true silent killer of yields and household budgets alike. It is a fundamental mismatch of risk and reward.
Theme 2: The 'Staircasing' Struggle
The Summary: Shared owners have the option to increase their ownership share over time through a process known as staircasing. However, the National Audit Office reports that transaction costs act as a significant barrier to this process. Each time an owner wishes to buy an additional share of 5% or more, they face a barrage of fees. These typical costs range from £800 to £2,568, which include property valuations, legal fees, and administration charges levied by the provider. Because these transaction costs are applied repeatedly, buyers often opt to staircase less frequently and in larger equity chunks. Furthermore, an owner's ability to staircase is heavily dependent on wider housing market fluctuations and house price changes.
The Propenomix Perspective: Transaction friction is the ultimate enemy of wealth creation and market liquidity. Imagine telling a retail investor they must pay thousands in dead money - valuation fees, solicitor fees, and administrative bloat - just to increase their stake in an asset they already live in. It makes zero economic sense. The government recently introduced 1% gradual staircasing to make it look easier, but repeatedly swallowing transaction costs will bleed a household dry over the lifecycle of the investment. If we look at the broader macro picture, with mortgage rates significantly higher than the previous decade's baseline, finding the surplus capital to staircase is harder than ever. It is a system perfectly designed to trap capital rather than liberate it. Do the legal work up front, and make it a simple, easy to understand, illustrative process to buy the shares.
Theme 3: Legislative Limbo & Leasehold Overlap
The Summary: Shared ownership properties are always sold as leasehold, meaning owners face standard leasehold issues on top of scheme-specific challenges. The Leasehold and Freehold Reform Act 2024 was introduced to strengthen leaseholders' rights, aiming to make lease extensions easier and cheaper. The Act gives shared owners the right to extend their lease by 990 years. However, despite receiving Royal Assent in May 2024, the majority of the changes are not yet in force. The Ministry of Housing, Communities and Local Government noted that implementation requires additional legislation and consultation, with measures to be introduced in phases during this Parliament.
The Propenomix Perspective: The government loves a headline, do they not? They promise sweeping, historic reforms to free leaseholders from the yoke of the tenure, but the reality is always phased rollouts and legislative limbo. We have a headline Act that is technically law, yet practically useless for the shared owner trying to remortgage or sell today. Shared ownership is a hybrid tenure that often manages to combine the worst aspects of both renting and owning. Until the secondary legislation is actually laid down and the mechanics are clear, the market remains in paralysis. Lenders are jittery, buyers are confused, and shared ownership providers are bracing for administrative chaos. A policy is only as good as its execution - and right now, execution is sorely lacking.
Theme 4: Blind Spots in the Data
The Summary: The government relies on the CORE dataset to monitor shared ownership transactions and demographics. However, the National Audit Office found that data returns from shared ownership providers are historically incomplete. The Ministry of Housing, Communities and Local Government does not routinely enforce compliance. Historically, the data has not captured partial staircasing, meaning the government cannot determine how often households actually increase their equity. Crucially, the data does not record whether households leave shared ownership due to distressed sales because the property is no longer affordable. This lack of comprehensive data limits the government's ability to track long-term outcomes.
The Propenomix Perspective: You simply cannot manage what you do not measure. We have billions of pounds of public grant money flowing into the Affordable Homes Programme, yet the government's data collection on actual outcomes is shockingly poor. How can you stress-test a market or evaluate a policy if you do not even track distressed sales? If a high street bank ran its loan book with this level of operational blindness, the regulator would shut them down by lunchtime. They are championing a pathway to home ownership without knowing how many people are actually falling off the path due to financial ruin. It is an investment strategy based entirely on hope, propped up by a lack of rigorous, empirical tracking. We need hard data, not just theoretical models.
Now - the Resolution Foundation, who look out for families on low incomes, with their report on the current mortgage landscape.
Theme 1: The Deposit Barrier Versus Income Lending Constraints
The Summary: The system of financial regulation in the UK was tightened significantly after the financial crisis to curb risky lending and mitigate system-wide risk. A common political narrative suggests these strict macroprudential rules are the primary reason young people cannot get onto the housing ladder today, with some politicians claiming the rules have "gone too far". However, the data demonstrates that the most significant barrier facing potential first-time buyers is finding the deposit, rather than failing lenders' income affordability tests. Out of an estimated 8.3 million potential first-time buyer households, almost half could pass the income requirements for a starter home mortgage. Yet, only 11 per cent meet the stringent deposit requirements. Over the past three decades, house price growth has drastically outstripped earnings, meaning that in most regions, the deposits required for a starter home have more than doubled relative to a typical salary.
The Propenomix Perspective: I have been saying this for years - the narrative that bank regulators are the ultimate villains locking out the youth is a convenient political distraction. The index says lending rules are tight, but the grim realisation is that asset price inflation is the real culprit here. The Bank of England can tweak stress rates all they want, but if you cannot scrape together the initial equity, you are not getting through the front door. We have created a macroeconomic environment where labour simply does not pay enough to acquire assets. When rent eats up a massive chunk of your net income, the idea of saving a 5 per cent deposit is laughable for the median earner. It is not the loan-to-income caps keeping people renting - it is the sheer, unadulterated cost of the bricks and mortar. But with prices where they were 23 years ago after inflation; people getting together/committing to a relationship later in life/taxation thresholds frozen/successive Governments doing their best to absolutely discourage renting, denting supply significantly - what’s the plan? I’ve said a number of times, the median earner’s £37k doesn’t compare well to the average first time buyer's income of £58k. Then remember just how high replacement costs are thanks to inflation - and why new build is barely viable in such a large percentage of the country when it comes to the affordable parts - it’s a confluence of contradictions.
Theme 2: The Reliance on the Bank of Mum and Dad
The Summary: Because saving for a deposit has become overwhelmingly difficult, many hopeful buyers are now highly reliant on familial wealth. Around a third of recent first-time buyers received financial assistance from family or friends to secure their property. The report highlights that while a small minority of buyers could plausibly save a 5 per cent deposit in short order, the vast majority are on a trajectory that would require over a decade of saving. This reliance on the 'Bank of Mum and Dad' has become an established route to homeownership. Consequently, access to this informal lending is described as a lottery, one that effectively transforms intergenerational inequality into intragenerational unfairness among today's younger cohorts.
The Propenomix Perspective: The Bank of Mum and Dad is the worst kept secret in UK property finance. We operate in a market where your ability to buy a home is increasingly decoupled from your own economic productivity, and instead tethered to whether your parents bought a semi-detached house in the Home Counties in 1996. It is a structural failure of epic proportions. When a third of the market requires a parental cheque just to get a seat at the table, we are no longer a property-owning democracy - we are an inheritance economy. The systemic issue here is that those without familial capital are forced into the private rented sector, paying elevated yields to landlords, which further erodes their ability to ever catch up. It is a bleak cycle, and frankly, relying on inherited wealth to prop up housing transaction volumes is not a sustainable economic model. The solution? Social Housing, most likely, but so horrendously under-invested in and destroyed by the failure to replace Right to Buy stock…….that’s also decades away from sufficiency.
Theme 3: The Danger of Blanket Regulatory Loosening
The Summary: In response to the housing crisis, successive governments have shown an appetite for a wholesale loosening of financial regulations to aid first-time buyers. Recent policy shifts have indeed softened some post-crisis macroprudential rules. However, the report warns that a blanket loosening of regulation risks being counterproductive. Currently, average debt-interest burdens for first-time buyers are already as high as they were during the market peaks of the early 1990s and mid-2000s. Crucially, Bank of England research indicates that expanding mortgage credit within a market suffering from highly inelastic housing supply primarily serves to raise house prices. This means that injecting more debt into the system fails to increase overall homeownership rates.
The Propenomix Perspective: Politicians love a demand-side gimmick. It is much easier to announce a regulatory loosening than it is to actually build houses where people want to live. But as this report rightly points out, pumping more credit into a supply-constrained market is like pouring petrol on a bonfire - you do not get more houses, you just get higher prices. We saw this exact dynamic play out with the stamp duty holidays and historic low SONIA swap rates. If you give buyers more leverage, the vendors and the housebuilders simply absorb that extra capacity via higher asking prices. We are already seeing debt-servicing burdens at historic highs. If the government forces the regulators to relax lending criteria across the board, they are just giving borrowers more rope to hang themselves with when the next economic shock arrives. They talk about “build baby build” then introduce more, and more, and more regulation - making supply-side solutions a pipedream.
Theme 4: The 'Starter Deposit' Equity Loan Proposal
The Summary: To assist those who can afford monthly mortgage repayments but lack deposit savings, the report proposes a targeted 'Starter Deposit' equity loan scheme. Under this framework, the government would provide a loan worth up to 5 per cent of a starter home's price, provided a high street lender approves a mortgage for the remainder. Crucially, this policy differs from the previous Help to Buy scheme in several ways: it applies to existing properties rather than just new builds, the buyer does not need to contribute their own savings, and the loan size is strictly capped based on the lower-quartile price of a terraced home in the specific region. This low price ceiling aims to deter those who already have access to alternative capital from using the scheme.
The Propenomix Perspective: I will give them credit - this is significantly smarter than the old Help to Buy scheme. By opening this up to the secondary market rather than restricting it to new builds, it stops developers from slapping a 15 per cent premium on an average box just because it has government backing. Capping it at the lower-quartile price point is also a sensible mechanism to stop the middle classes from using taxpayer money to upgrade to a larger detached home. That being said, it is still fundamentally a demand-side subsidy. It solves the immediate liquidity issue for the buyer, but it adds another layer of state intervention into a market that is already addicted to it. The real, long-term fix is aggressive planning reform to unlock the supply constraints. Until we build more, every scheme is just a different flavoured sticking plaster. It’s better than the rest - but the rest wasn’t very good in the first place and arguably was just a wealth transfer system to the big developers, and a few of their directors who had the nouse to negotiate some incredible uncapped bonuses.
Last up - flooding, and something that’s been a part of my longer-term strategy for years now having seen what everyone has seen on the weather - forget “global warming”, it’s more like “national raining” in terms of what I see - and given our temperatures could go 10 degrees either way and still be hospitable, the rainfall level is far, far more relevant to us than our specific temperature (rather than the global temperature, ice caps, sea levels etc which I accept is still relevant to this topic!). Here we go with “Flooding the market”:
Theme 1: The Rise of the Climate Mortgage Prisoner
The Summary: Research from Public First reveals a looming threat for the UK housing market, identifying the potential creation of "climate mortgage prisoners". By 2050, up to 430,000 mortgage-holding properties could become uninsurable or face exorbitant annual premiums exceeding £8,000 due to severe river, sea, and surface flood risks. Mortgage lenders inherently require borrowers to maintain active building insurance to safeguard the property's long-term value. If properties become uninsurable, homeowners will be unable to remortgage or switch providers, trapping them on standard variable rates. Currently, this represents an interest rate of around 7%, compared to an average competitive rate of 4%, meaning these homeowners could face an additional £4,000 in annual interest payments. Constituencies like Boston and Skegness, and Thurrock, are most exposed to this specific risk.
The Propenomix Perspective: Let us be absolutely clear about what is happening here. The market is slowly waking up to a reality that environmental models have screamed about for a decade or more. The idea of 430,000 people trapped on standard variable rates is terrifying for household balance sheets, but look at the macro picture. If lenders are forced to hold thousands of un-remortgageable loans, we are looking at a localised credit crunch. We have seen what happens when risk is mispriced - just look at the leasehold scandal. The moment a high street lender decides they do not want the systemic risk of an uninsured, soggy asset backing a 25-year loan, the music stops. I find it fascinating that the focus is often on the borrower's SVR pain. Yes, paying 7% instead of 4% hurts, but the real catastrophe is the evaporation of the underlying asset's liquidity. If you cannot mortgage it, you cannot sell it to the vast majority of the market.
Theme 2: The FloodRe Cliff Edge
The Summary: The report highlights a critical vulnerability regarding the future of the joint government and industry scheme, FloodRe, which currently subsidises insurance for 346,000 high-risk homes. FloodRe is scheduled to end in 2039, after which the market is intended to return to risk-reflective pricing. Without intervention or an extension of the scheme, premiums for these properties could surge to as much as £10,000 annually. Industry experts warn that the consequences of this 2039 deadline could materialise much sooner. Given the 25 to 35-year lifespan of average mortgages, lenders may begin restricting lending on reliant properties by the end of the current parliament in 2029. The insurance sector is already feeling the strain, with 2024 seeing record UK property insurance payouts of £5.5 billion, 22% of which was driven by weather-related claims.
The Propenomix Perspective: FloodRe is the ultimate can-kicking exercise by Whitehall. It artificially suppresses the true cost of risk, keeping premiums palatable while doing absolutely nothing to stop the water rising. I have warned before about the dangers of market-distorting subsidies. Now, we are staring down a 2039 cliff edge, and the banks are not going to wait until 2038 to adjust their risk models. If you are pricing a 5-year fixed product today, 2039 is already looming over the refinancing horizon if the term is over 13 years long. Lenders will start quietly redlining these postcodes long before the politicians admit there is a problem. You cannot force a bank to lend against an uninsurable asset, nor can you force an underwriter to take on guaranteed losses. The idea that we will smoothly transition to "risk-reflective pricing" without a colossal destruction of wealth in these areas is pure fantasy.
Theme 3: Capital Destruction and the Supply Squeeze
The Summary: The inability to secure mortgages on flood-risk properties is expected to severely impact house prices. The report draws parallels with short-leasehold properties, which also face mortgage restrictions and typically see price declines of over 20%. Furthermore, homes directly affected by flooding can lose 7% of their value immediately, depreciating by 12% over a decade. Conversely, this dynamic will effectively shrink the available housing supply, driving demand toward low-risk areas. Modelling suggests house prices in safer regions could rise by up to 8%, or £34,000. Notably, 76% of total outstanding mortgage debt in England is concentrated in constituencies facing above-average vulnerabilities to climate risks, predominantly in London and the South East.
The Propenomix Perspective: Here is the real meat of the issue. A 20% haircut on asset values in coastal and flood-prone areas wipes out the equity of an entire generation of homeowners. It pushes thousands into negative equity overnight. But the secondary effect is the one that will drive national inflation data. We already have a chronic structural deficit in housing supply. If you ring-fence hundreds of thousands of homes as untouchable, toxic assets, you squeeze the remaining "safe" supply even harder. A projected 8% premium for a dry house is probably conservative. We will see a two-tier market emerge: prime dry property and heavily discounted, unmortgageable wet assets traded only by cash buyers and speculative yield-chasers. And let us not ignore that 76% of mortgage debt sits in these vulnerable zones. The Bank of England must be looking at this concentration of risk and sweating bullets.
Theme 4: Planning Failures and the Green Finance Gap
The Summary: Efforts to mitigate these risks have been hindered by historic underinvestment and deteriorating flood defences. Despite a government target to build 1.5 million homes by 2029, new housing continues to receive planning permission on previously undeveloped floodplains without adequate resilience measures. To finance adaptation, the report examines the role of green mortgages, which currently account for 11% of the market but strictly focus on energy efficiency rather than climate resilience. To address data gaps, experts recommend the introduction of Flood Performance Certificates (FPCs). These would function similarly to Energy Performance Certificates (EPCs), providing standardised risk ratings to help insurers and lenders accurately price risk and value property-level resilience upgrades.
The Propenomix Perspective: The sheer cognitive dissonance of government policy never fails to amaze me. On one hand, they are panicking about climate risks; on the other, local authorities are rubber-stamping large-scale developments on literal floodplains to hit arbitrary housing quotas. You cannot out-build a housing crisis by building future swamps. As for the financial sector's response - green mortgages are currently little more than a marketing gimmick to offer a nominal discount for having a decent boiler. They do exactly zero to mitigate the existential threat of your living room ending up under a foot of river water. The proposal for Flood Performance Certificates is actually a rare piece of sensible policy. Markets only function efficiently with accurate data. Give us a standardised metric for water risk, and let the market price it. Until then, investors are essentially flying blind into the storm.
If we lost 800,000 homes - not 8 million - that is four years of current output/production of new homes. In a market as structurally damaged as this one. If only 10% of the properties brought into question become unfundable. There will still be a market - I’d suggest closer to 30-50p on the £ than 80p, as the report suggests. Cash buyers only…..!!!!
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.