“Spend now, pay later.” – Helen Miller, chief exec of the Institute for Fiscal Studies, nicely framed.
This week’s quote pertains to the deep dive, as usual, and I tackle the Budget summary from a couple of the major think tanks, now we finally have some clarity.
As the calendar creeps towards a new year, it’s a natural time to pause and tackle the biggest challenges that keep SME property businesses from achieving true, sustainable growth. For most, this boils down to two core areas: Laying a bulletproof strategic plan for the next 12 months, and finally cracking the code on financial measurement and accountability. If you’ve ever felt lost in a sea of bookkeeping data, or if your productivity methods are falling short, it’s time to switch from doing to leading—and truly understand how your assets are performing. Book in on the next Property Business Workshop with myself and Rod Turner – Thursday 22nd January – Central London – https://tinyurl.com/pbwnine
I’ve changed the stylistics a little, this week. I ran with a Supplement that was solely curated by me but all AI-generated a few weeks back, as an experiment. Feedback was mixed. It was certainly enough for me to carry on putting the effort in, week-on-week. However, there was a lot of positive feedback about the structure and the headings, and the layout – with that in mind, from the macro section onwards I’ve adopted that format to make it easier to read, and also tried to tighten it up a little. Again, I will really value feedback as I know people aren’t always keen on change, but I’m sure Supplement readers will be OK with change for the better, and that’s what I’m always aiming for!
Trumponomics time. The latest trade figures highlighted the fact that UK exports to the US fell to their lowest level since January 2022, due to tariffs. Not unexpected. You can’t look past the JLR cyber-attack and the impact it had on the UK economy as a whole, and of course on exports to the USA when it came to cars. As far as pharma goes, some expected negotiations didn’t go the UK’s way this week, and NICE has been asked to raise their cost-effectiveness threshold by as much as 25% to make it easier for the more expensive and innovative drugs from US firms to be purchased by the NHS.
The 100% tariff threat is still there, and the UK counter is 0%. A fair bit of negotiating left to do, you’d think. It looks to be a straight negotiation – tariff versus amendment to the NHS drugs cap. On we go.
Mr Trump continued his “mission for world peace” as he rolled out the plan to give East Ukraine to Russia, as their reward for their incursion. We don’t negotiate with terrorists – apart from the fact that we do, every time, and often the terrorists have been quite effective, it would seem. Show me the incentive and I will show you the outcome.
Meanwhile, thanks were of course “given” in the US, and so markets were quiet after the budget. Overall, though, the bond markets seemed to quite like Rachel Reeves’ extended headroom, aside from anything else. The real volume will be back on Monday, however, so we will see how and where it goes from there.
US ranchers described themselves as feeling “economically whiplashed” – ouch – from all the policy changes. This suggests some instability in the sector, regardless of tariff outcome conversations. US inflation is also persisting, of course, in the figures (not in the rhetoric, naturally).
There was also an “11/10” phone call with President Xi, who apparently agreed to accelerate purchases of US goods on that phone call. It was little more than half a week, thanks to Thanksgiving, and so we will leave it there.
Back to the safety of Blighty. The UK real time property market. Chris Watkin delivered one more time in a big Week 46. Listings printed 24.7k, down 1400 on last week, as the market continues the listing slowdown towards the end of the year. The average week 46 saw 26.9k homes listed, as the balance really continues to redress. It is still a slow process and another clearout (at the end of the year) followed by the usual Boxing Day Action, will tell us more about where we are at – but I’m happy now concluding that listing overperformance is over, and therefore will drop out of the figures in about 9-10 months time, is my sense (drop out of the year-on-year data, I should clarify – what we call “base effects”).
My “10% more stock than a normal market” ready reckoner continues to hold on the back of circa 2 years of overperformance in listings compared to historical averages, and only a couple of months of us creeping back below those averages. There have been 1.61m homes listed this year so far! We are 8.2% ahead of the 9 year average, but that does include 2020 which pollutes the figures somewhat. We are really inching back towards the 2024 numbers now, week by week, having been 6-7% above them at various points in the year – but we are still listing more than we are selling (as always), so it is all eyes on the withdrawal rate as a general rule.
We are only 0.8% ahead of the 2024 listings YTD now, but are still 8.4% ahead of the 2017-19 average. Week 46 is historically nothing special, but we did list 14.9% fewer homes than week 46 of 2024. It looked a lot like a quiet pre-pandemic week 46. Indeed – there’s just about enough time left for it to be a close one between 2025 and 2024 for listings – but if you believe a fair few have held off the market because of the budget, will they go on before the end of the year now (Boxing day!) – or will 2024 stay as the listings winner for the past decade? It will be too close to call. There’s about 13k listings in it now, and at current pace 2024 will just about hold – but I do expect a bit of rubber band activity now the budget is a known quantity.
Price reductions in week 46 – 13.4k – another shift downwards. Estate agents know that price reductions at this time of year are just not that effective, so they try a lot less hard in my view. October’s completed number was 12.8% of existing stock reduced – compared to September’s number of 14.1% for reductions – August’s 11.1% still looks a summer anomaly as the numbers came back to the 14.1% reduced in July, 14% reduced in June, in comparison to last year’s 12.1%, May’s 13.4%, and the 5-year average of 10.7%. 2025’s average is 13.2%. A bit of a reversal of what I’ve been saying for most of this year – LESS stock being listed, AND fewer reductions – the market is heading towards normalization, although we still have that (roughly) 10% more stock than a normal market, if not a touch more.
What still holds and will for a while yet, however – there’s still more stock, and there have been more reductions – absolutely and relatively. 23% more reductions than the 5 year average, if you take the difference between 13.2% and 10.7%. “25% more reduced properties than a normal market” also works as a ready reckoner, or is likely to even be an underestimate just because of the amount of stock out there.
20.9k homes sold subject to contract, healthy enough but 2000 down on last week. The 2025 average is 26k. Week 46s on average print 21.4k (over the past 9 years) – so we are just under by a couple of percentage points. SSTCs are up 3.4% year on year and 12.2% on 2017-19, and will stay ahead of 2022 (we’ve passed the “day of the lettuce” and now into aftermath territory). With SSTCs up 3.4%, whereas listings now are only up 0.8% on last year, this still signifies more “intention to transact” than 12 months ago, to this point in the year, for sure – or, put a different way, comparatively this looks like a more functional year than 2024 was (even though stock numbers have continued to rise throughout the year due to relentless listing). It’s the second best year for 9 years behind 2021 for Gross Sales. Week 46 of 2024 was a little more buoyant, but this was considerably better than week 46 of 2022 and also 2017 and 2018. 2nd place for the decade in Gross sales is safe, in my view, for 2025.
There was one real anomaly that I wanted to update on. The market remained distorted at the moment on this specific matter. Listings vs sales prices. It really does seem now that “only” “cheap” stuff was listed in the run-up to the budget. Average asking price of the listings in week 46? £394k. The average price of SSTCs? £352k. An 11.8% difference. The 9-year average is a 16%-17% gap here! This is pretty seismic. I do expect, however, once there is clarity (whatever it is!) on the budget, this will right itself – whether it does straight away, or waits until Boxing Day/January (I’d suspect the latter). That number in September? £452k. October? £415k. It has dropped like a stone. It is always higher in September as the expensive houses go on the market after the Summer Holiday divorces (OK, I made the divorce bit up, but it wouldn’t surprise me!). This will right itself, but the metrics will stay a bit noisy until the budget “rubber band” has snapped back completely (OK, not for houses above £2m!).
We went into November with 742,072 homes on the market – October’s number was 751,797 – so there was a drop of nearly 10k. The numbers look like a slowish October for net listings but nothing extraordinary. We aren’t back to the peak of 763k in early August – it really is looking like that 763k will be the cycle peak now. Looking forward to the 1st December number from Chris when it is available.
For context, as the market got stickier before the pandemic that number was c. 660k, a sellers’ market is more likely to be under 600k. At the end of October 2024, 725k were on the market. Ongoing figures will be interesting as we don’t watch the number of properties withdrawn from the market week-on-week. There were only 2.4% more properties on the market on November 1 2025 compared to November 1 2024, but the 2024 number was already the 8-year high.
Chris also looks at the per square foot on sold STC properties. October’s sales agreed average was £343.18/psqft – that was a huge leap on September’s number, so large I am just going to check with Chris that he hasn’t changed his methodology. Big increases in the Halifax index particularly – but not THAT big – September had seen a sqft pricing on sales agreed of £336.54 which was dropping, at the time – the previous numbers for context: August was at £338.78/sqft and that was 1.41% higher than August 2024 and 14.25% higher than August 2020 – but down 2.2% on June’s SSTC number of £346.45 and down 1.75% on July’s number of £344.78.
So we aren’t yet back to June or July but it looks like a bigger-than-usual summer adjustment and we are nearly back there, in short.
Fall throughs pulled back to 24.7% from 25.4% last week – the long-term average is 24.2%. The net sales were weaker this week as we would expect – 15.7k, 3% up on last year-to-date and 9.1% higher than 2017-19 – now leapt above 2022 levels (more than 35,000 in front now). Week 46 9-year net sales average 15.9k, so it was a very close one.
I always give Chris a weekly shout out here because he’s more prolific than “just” this epic tome he releases weekly on the UK property market – he comes up with some great stats on a regular basis. Drop him a like, subscribe, and all the rest of it and some kind words for his content creation. If you are in the industry and want support in growing your business or to be a more effective communicator/be more in touch with your local market – that’s his core business – give him a shout. The article gets published on the Property Industry Eye website, and the video on his YouTube channel – @christopherwatkin
Migration. It was a big surprise to see quite such a big drop, mostly revised – we were told in the media – due to a much larger number of British Nationals leaving the country in the year to June 2025. Here’s what I made of the report and that claim:
We need a quick deep dive into the underlying mechanisms that caused the dramatic, two-thirds reduction in long-term net migration (from 649,000 to a provisional 204,000) for the year ending (YE) June 2025.
The explanation is fundamentally simple, yet structurally complex: it is a cynical consequence of targeted policy restrictions on immigration, combined with the expected churn of previous large cohorts leaving the UK.
The primary engine of the net migration fall was the drastic decline in long-term immigration, which dropped by 401,000 over the year to 898,000.
The reforms responsible for this politically convenient reduction included restricting care workers from bringing family members and increasing salary thresholds for those on Skilled Worker visas.
Compounding the sharp cut in immigration is the continued, gradual increase in long-term emigration. Provisional estimates show emigration rose by 43,000 to 693,000 in YE June 2025.
This outflow is heavily driven by non-EU+ nationals (286,000 leaving). Approximately half of the non-EU+ emigrants who left originally arrived on study-related visas. This reflects the natural cycle: the large number of students who arrived after the pandemic are now completing their studies and leaving the country.
In short, net migration plummeted because the government effectively closed the door on new dependents while existing student cohorts continued to exit, resulting in the two-thirds reduction seen in the provisional figures.
Hold on, though. The media told us this was all about Brits leaving the country, right? That hasn’t featured at all in the ONS report, particularly? Let’s dig a little deeper.
The media’s fixation on the alleged “wealth” of departing British nationals, and the subsequent economic panic, is a predictable and somewhat cynical response to the raw figures. While the sources do not provide the necessary data to confirm their pecuniary status, there is definite merit in the underlying analysis that the outflow of British nationals is harmful to the UK economy.
The raw numbers confirm the media’s concern about scale: Long-term net migration for British nationals is provisionally estimated at negative 109,000 for the year ending (YE) June 2025, meaning significantly more British citizens left than arrived. Total long-term emigration by British nationals reached 252,000 during this period, accounting for 36% of total emigration and placing it at similar levels to non-EU+ emigration.
The key data confirming the damage, regardless of their supposed ‘wealth, is their demographic composition: the vast majority (91%) of British nationals who left the UK long term in YE March 2025 were of working age (between 16 and 64 years). Only around 8% were children and fewer than 1% were aged 65 or over.
This outflow represents a direct and quantifiable drain on the UK’s productive capacity and human capital.
It is crucial to remember that the current numbers for British emigration are based on newly developed methods using the Registration and Population Interaction Database (RAPID), which the ONS implemented because the previously used International Passenger Survey (IPS) had significant under coverage of this nationality group. This implies that this level of British emigration may not be an entirely new phenomenon but rather a more accurately measured crisis revealing the true scale of the long-term domestic brain drain.
The loss of 91% working-age citizens confirms that the economic harm is inherent in the demographics of the outflow, regardless of whether they own a second yacht – so we will have to watch this closely. Anecdotally – just tune in to talk radio and you will hear many stories of the brightest and the best graduates leaving to pursue a better life abroad.
Moving on to Zoopla, and the House Price Index for November 2025 – I was pleased when I saw Richard Donnell, the Exec Director, share this online and speak of a “rebound” in the market as I’ve been saying something similar for the past month or so, after budget fever really kicked in.
The report confirms the UK housing market remains stubbornly resistant to a rapid correction, though deep regional and asset class divergence is setting in. The clarity offered by the Budget, while welcomed by political acolytes, does nothing to address the fundamental affordability crisis, as Zoopla sees it.
The headline figure shows the average UK house price at £270,200 as of October 2025, registering an annual rise of 1.3%. This marginal gain is only slightly softer than the 1.7% recorded the previous year, proving the market’s resilience.
However, the “under-the-hood” data reveals a stark bifurcation, confirming the economic malaise of the high-value regions:
The property market’s trajectory is now dictated less by broad economic health and more by unreformed tax policy and affordability constraints.
The nuance that generalists will overlook is the destruction of the property ladder’s entry point.
The overall average price may be up 1.3%, but the property type analysis reveals that Flats and maisonettes saw an annual price decline of -1.1% (£-2,150) to October 2025. This is the only property type to see negative annual growth.
This detail matters profoundly for the medium-term outlook because flats represent the most common purchase for first-time buyers (FTBs) and investors. This decline signals that the highest cost of debt and the impact of the frozen stamp duty thresholds are suppressing the appetite and capacity for lower-rung transactions. Even with FTB reliefs, more than half of first-time buyers in Southern England – rising to 80% in London – now pay stamp duty. The market is now demonstrating that it will not tolerate price rises in the most affordable segments while the cost of debt and taxation remains this high. Buckle up for a period of painful stagnation in city centre entry markets, which – from my perspective – looks endless, to be honest.
To Scotland, in that case, where we have refused to learn the lessons of the withdrawal of s21, or s33 as they used to call it, North of the Border. More lessons we won’t listen to, then? Let’s have a look at the “Scottish Rent Shock” and what’s going on in their market.
The latest Scottish Private Sector Rent statistics for the year ending September 2025 offer a cynical insight into the market’s underlying stresses, proving that affordability has finally hit a brick wall in key urban areas, while inflationary pressure shifts violently to peripheral markets.
The headline figure for the most common rental property—the 2-bedroom flat—saw a Scotland-level rent rise of 3.1% to £921 per month, comparing favourably to the 12-month UK CPI inflation rate (3.8%) for the period. This aggregate figure, however, masks profound and deeply worrying divergence.
While the national average is flatlining against general inflation, inflationary pressure is rampant in smaller units and peripheral regions:
This means the cost of access to housing for younger, less established, and non-family households is increasing well above the benchmark cost of living. Conversely, large properties (4-bedroom) saw a national average decrease of -1.5%, demonstrating a flight from higher-cost or non-urban family accommodation.
Crucially, major economic centres are decelerating sharply. Lothian, home to the highest rents (e.g., 2-bed at £1,356), saw 2-bedroom growth stall to -0.1% and 3-bedroom rents drop by -5.5%. This confirms that maximum affordability has been reached and household budgets are fully exhausted. Meanwhile, smaller Broad Rental Market Areas (BRMAs) like Dumfries and Galloway are playing catch-up, registering eye-watering growth rates of +12.7% for 2-bedroom units. The overall health of the economy, as evidenced by this report, is highly fractured, with inflationary pressure relocating to the lower-cost end of the housing spectrum due to chronic supply shortage.
Translating this structural stress into UK Residential Property impacts is straightforward, particularly for the Buy-to-Let (BTL) sector.
Landlord Sentiment: The critical factor is that the deceleration, and in some cases reversal, of rent growth in high-value BRMAs (Lothian, Dundee) is a dire signal for landlord cash flow. Given that new mortgage debt expectations are priced around the 5.6% mark, demanding yields of 7%+ for debt service cover, flat or negative rent growth in prime markets means BTL investment is now deeply unattractive.
Mortgage Affordability: The high-growth rate of 5.5% for shared units reinforces housing costs as a key driver of stubborn inflation, potentially contributing to the Bank of England maintaining its defensive posture against cutting rates. If the cost of debt remains high, and new rent growth stalls in major cities, investment purchasing vanishes.
This data is bearish for house prices in investment-heavy urban centres. The loss of profitability drives Landlord Sentiment toward liquidation, potentially increasing the level of stock on the market and exacerbating the affordability crisis by further depressing the supply of rental units. Flats stay flat, leasehold or not!
The fundamental detail generalists overlook is that these figures are based predominantly on advertised rents (or “new rents”). They represent the cutting edge of market price discovery.
The fact that new rents are dropping or stalling in major urban areas (e.g., Lothian’s 2-bed change is -0.1%) while the Private Rented Sector (PRS) size is still larger than the start of 2022 (up to 349,075 registered properties by September 2025). This indicates that the cost of entry for new tenants is reaching its practical limit. The decline in the 4-bedroom segment (-1.5%) suggests the market is not even tolerating price maintenance at the higher-value end.
This matters because it signals that the economic squeeze is translating directly into diminished revenue potential for new or remortgaging landlords. This lack of appropriate returns on capital investment, compounded by high interest rates, ensures that housing starts remain in an ugly state, and the supply crunch – which is the true driver of long-term rent growth (66.3% cumulative rise for 2-bed properties since 2010) – will not abate. Buckle up for continued rental market instability.
Is it fair to say that the highly publicized landlord exodus is not merely anecdotal; it is now statistically verifiable, while the “peak” in market inventory has been clearly defined and passed?
The idea that the Scottish Private Rented Sector (PRS) is currently climbing toward a peak is inaccurate. The data shows divergence between the two primary metrics:
In summary, the most recent, granular data confirms that September 2024 was the high watermark for property registration volume.
The newly integrated Landlord Register spreadsheet provides the most ugly and significant piece of data: the number of individual landlords is in clear decline, confirming the structural stress resulting from factors like high debt costs (requiring 7%+ yields).
This is the hard evidence confirming market liquidation, and even more clearly, consolidation of asset owners. The previously cited structural constraint that registrations last for three years, meaning there is a known time lag in de-registering properties, now takes on an even more cynical light. If the number of landlords is falling definitively, the true loss of available rental stock is likely under-reported by the current property register figures – the real number of available units is much smaller.
The market is shedding capital providers at a measurable rate, suggesting investment profitability – already crippled by high debt expectations – has collapsed, which will only exacerbate the chronic supply crisis and future rental inflation. Buckle up.
Reverting to the calm of the Gilts and Swaps, then. It is dangerous to read too much into this week for reasons already stated – Thanksgiving meant very light activity from the US, so we need this coming week to really see if we have had the message we think we’ve had from abroad (the Green Light, overall). JP Morgan’s announced £10bn tower (that’s been on, off, on, etc. etc.) sounded like a resounding vote of confidence to me, though – and Goldmans are doubling their Birmingham workforce – positive announcements after the limp budget.
The 5y gilt opened the week at 3.955% and closed at 3.898%. It was volatile on Wednesday – particularly when the OBR leaked their report (accidentally?) before Reeves had even had a chance to start the speech. The swings weren’t that outrageous, though, and things calmed down by the end of the day (unlike end September 2022, note).
So – nearly 6pbs off – regularly cited as my favourite weeks. The Thursday close around 3.91% translated to a swap of 3.585% being the last traded; that discount narrowed slightly to 32.5 basis points, and I will continue keeping an eye on that.
The longs? After opening at a 5.354% yield, the 30-year gilt closed out at 5.189%, a big drop of 16.5bps as the yield curve really did get a fair bit shallower. The budget was the driver and insanity-level 30-year yields are perhaps behind us. For a bit. Until the next time. Maybe.
At the end of this week, that was all translating into the cheapest Ltd co mortgage offering for rental being 5.25% with zero fee. That margin looks skinny compared to the cost of debt – so, your tight margins are being replicated by the lenders too, it seems!
So – rather than rehash all that, I thought for post-mortem 1 (yes, more is likely next week) I would look at the output from two different sides of the fence (although both remain relatively sensible, central and pragmatic, really): The output from the Institute for Fiscal Studies (IFS), and also the Resolution Foundation whose ex-CEO, Torsten Bell, has been being credited for being a strong influence on the budget that the Chancellor delivered on Wednesday.
IFS first up, and where they landed; The Institute for Fiscal Studies (IFS) initial response to Chancellor Rachel Reeves’ Autumn Budget 2025 (presented in November 2025) confirms what every seasoned macroeconomist already suspected: this was a cynical exercise in political optics, delivering immediate spending increases while back-loading the pain to preserve the illusion of stability just before an election. It was a “Spend now, pay later” approach.
This Budget, though not a “grand tax-reforming Budget”, contained a sizeable, £26 billion tax increase package—not far short of the previous year’s £32 billion (although it was billed at £40bn, of course). The puffery reminds me of American Wrestling. The core economic trajectory set by this Budget is defined by fiscal drag and future spending restraint, neither of which bodes well for unlocking meaningful growth or solving the UK’s chronic structural housing shortages.
The Chancellor chose to accommodate substantial short-term borrowing, mostly due to spending pressures outside direct government control. The IFS confirms that borrowing is actually set to be higher than previously forecast in the current year and across each of the subsequent three years (2025–26, 2026–27, 2027–28, and 2028–29). Despite the highly publicised consolidation, total borrowing is expected to be a shocking £57 billion more over the five years to 2029–30 than anticipated in March.
This fiscal consolidation is heavily backloaded, relying on tax rises and promises of spending restraint in the subsequent Spending Review period to deliver lower borrowing only from 2029–30. The IFS is rightly skeptical, noting that promising future restraint just before the next election is highly questionable. It’s political cyanide, going through with some of these proposed measures.
Fortunately for Reeves, the Office for Budget Responsibility (OBR) forecast contained better news than feared. While there was a widely expected, modest downgrade to the productivity growth forecast, this was negated by higher growth this year. Furthermore, higher expected inflation and stronger real wage growth pushed up tax receipts, largely offsetting increases in welfare spending caused by inflation. Consequently, the Chancellor faced a manageable £6 billion downgrade from forecast movements, significantly smaller than the ugly alternative.
A key choice was the decision to spend more on welfare, most notably by scrapping the two-child limit for Universal Credit, costing £3 billion per year in 2029–30. This is framed as one of the most cost-effective ways to address child poverty. Furthermore, the government is finally acknowledging the considerable spending pressures from rising Special Educational Needs and Disabilities (SEND) costs, which could add £6 billion per year of pressure by 2028–29. Explicitly forecasting these pressures is welcomed.
The most impactful element for the macroeconomy is the relentless increase in the tax burden. The overall tax burden is forecast to climb from 36.3% of GDP in 2025–26 to a staggering 38.3% in 2030–31. This cements this parliament as the largest tax-rising parliament since at least 1970.
The largest single measure is the three-year extension of the freeze in personal tax thresholds until 2030–31, which is expected to raise £12.7 billion in that year. This is the very definition of fiscal drag. The effect of the threshold freeze, which began in April 2022, is now forecast to increase the number of taxpayers by 5.2 million and the number of higher rate taxpayers by 4.8 million by 2030–31. The IFS confirms this approach clearly represents a tax rise on working people, breaching the government’s manifesto promise regarding National Insurance thresholds.
This fiscal drag is a fundamental headwind for the UK residential property market:
When addressing property taxation, the Budget was deeply disappointing for those hoping for comprehensive reform (like fixing the council tax system or stamp duty). Instead, the Chancellor opted for a politically motivated tweak:
This lack of fundamental reform (like addressing the distorting effects of stamp duty) ensures transaction volumes remain constrained, perpetuating the ugly stagnation in the mid-to-high value segments where moving house is fiscally punitive.
The Chancellor also took a welcome step on electric cars by introducing a per-mile tax, which will eventually become the second-biggest measure in the Budget, raising £7 billion annually. However, the flat rate is criticised for failing to reflect that driving at congested times imposes much higher costs on society.
Ultimately, the IFS response underlines a Budget that prioritises short-term stability over long-term structural health. The increased headroom (£22 billion) is a sensible move welcomed by the IFS for providing greater insulation against economic turbulence. However, the credibility of the entire fiscal plan—relying on promises of future restraint to deliver lower borrowing in 2029–30—is highly suspect.
The economic consequences for the property market are clear: the fiscal drag of frozen thresholds will continue to suppress affordability for FTBs, while the weakening of incentives to save and invest will keep the BTL market in liquidation mode. Without fundamental tax reform, transaction volumes will remain subdued, preventing any meaningful recovery in activity until the cost of debt falls substantially.
The IFS predicts a period of ongoing market stagnation, underpinned by high taxation and a highly questionable political promise of austerity just before the next election.
Moving on to ResF, then. The Resolution Foundation’s assessment of the Autumn Budget 2025 confirms a similarly cynical diagnosis: Chancellor Rachel Reeves delivered a politically expedient, front-loaded spending spree built on back-loaded fiscal tightening. While she squeaked over the immediate fiscal hurdle, the plan for future redemption is protracted and uncertain, relying on promises of restraint that are highly suspect right before a general election. This Budget is not an escape route; it is a stairway to fiscal headroom paved with tax increases that act as a permanent ceiling on macroeconomic potential and household affordability.
The great drumbeat of doom that preceded the Budget proved to be over the top. The underlying economic reality was managed by balancing two conflicting forces:
The Budget’s decisions, particularly those on taxation, translate into a Bearish signal for property volume and investor sentiment, while offering temporary, modest relief to affordability pressures.
The single most significant and cynical detail is the extreme back-loading of the tax burden, which exposes the political fragility of the entire fiscal plan.
Outlook: The Budget has simply deferred the reckoning. Immediate inflation relief may offer a transient opportunity for the Bank of England to cut rates, but the structural constraints of massive fiscal drag and the persistent disincentive to property investment remain firmly in place. The political promise of future austerity is highly suspect, meaning market uncertainty is now embedded in the long-term fiscal forecast. ResF sees continued stagnation punctuated by political promises of pain that are highly unlikely to be delivered.
So – where did the IFS see eye to eye with ResF, and where did they depart?
The initial responses from the Institute for Fiscal Studies (IFS) and the Resolution Foundation (ResF) to the Autumn Budget 2025 demonstrate a remarkable, and frankly cynical, consensus on the overall fiscal strategy, yet diverge on the nuance of political credibility and the impact of specific tax choices. My view is that their analysis reveals that the Budget’s core mechanism is inherently detrimental to investment and affordability, regardless of which think-tank you believe, or which side of the political fence you are on.
Both institutions fundamentally agree on the ugly political architecture of the Budget:
The subtle disagreements lie in the distribution of pain and the immediate economic forecast read-across:
Both are fundamentally right in their assessment of the Budget’s political duplicity. Validation hinges entirely on whether the government can deliver the promised £6.4 billion in real-terms cuts to ‘other’ departments (equivalent to 88 per cent of the average annual cuts during peak austerity) in 2029–30. My view here is simple – this would be completely incongruent with how they’ve acted so far, and 88% would VERY soon be “Austerity Mark II”: this is protracted and uncertain and likely to be abandoned.
What They Both Missed: The most significant omission for the UK property market is the deep-seated, structural distortion between employed and self-employed income taxation. ResF touches on this, noting the bias against employment remains close to record highs. However, neither report fully hammers home that until this distortion is addressed, the labour market remains structurally inefficient, and capital formation for housing is hampered by punitive relative taxation.
The most annoying, and perhaps most ugly, part of this Budget for the Buy-to-Let (BTL) investor is the decision to impose a 2 percentage point rise in Income Tax rates on rental income, dividends, and savings.
This move confirms the government’s cynical approach: targeting the capital provider while offering no fix to the affordability crisis. When new mortgage debt expectations are priced around the 5.6% mark, requiring yields of 7%+ for basic debt service cover, increasing the tax rate on rental income is a direct assault on the economic viability of the BTL business model. It accelerates the liquidation phase of the rental market, further depressing rental supply, and ironically, driving up rents for the very consumers the Budget claims to protect. They are sacrificing housing supply stability for a few billion pounds in receipts. It’s pure, short-sighted political posturing. None of the real problems have been fixed, whoever’s analysis you prefer!
So – as I draw this week to a close, the next Property Business Workshop is filling up. As we turn our eyes to 2026, tickets are available! We start the year with a bang, discussing strategic planning and how to make the most of the next 12 months, with some of our own methods and takes on productivity and time management, alongside systems and processes. The other half of the workshop is about the most common pain point in SME property businesses – accounts, bookkeeping and group accounting. This is about measuring asset performance – not “how to use Xero”, but “how to make the most out of financial information” – what should you be seeing monthly, and how should you interpret it properly and use it strategically to grow your business, safely but quickly?
SUPER EARLY BIRD tickets are currently available with a genuine 20%+ discount off the face value. 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. That’s the best way to get a substantial conversation with myself, Rod and other experienced Property Business people! Join us! Thursday 22nd January 2026, Central London; https://tinyurl.com/pbwnine
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. It will be slow(ish), and take a little while longer to get off the ground – and the amount of stock around is still keeping things suppressed at the moment – but as the market continues to improve slowly, it is a case of “here we go” in my opinion.
