Rents took a back seat this week, sellers stepped on the ignition but first time buyers took the wheel. London stalled while the country coasted, meanwhile Angela Rayner tried to divert traffic towards ground rents while Ed Miliband turned the lights green on energy efficeincy upgrades back at home. Welcome to another UK Property News Recap – 23.01.2026.
Rents take a turn
Rents took a tumble as interest rates fell, enabling some tenants to move onto the ladder while others opted to stay home for longer, saving or studying overseas elsewhere. As a result Hamptons found rents dipped 0.7% over the course of the year. £10 a month less than last year for the same home. London was the first to topple as affordable levels were breached, down 2.7% with the South East following, down 1.0%.
Despite stock levels increasing 6% on 2024 levels, they remain 8% lower than 2019 levels. The 5% stamp duty increase restraining landlords activity, leaving only 10.9% of sales to be investment driven. For those still in the game; the North East was the most popular area, with 29% of homes being sold to landlords, however falling rates and prices saw buy-to-let investors once again look to the South East, East of England and North East to invest.
Typically, rents are their lowest at the end of the year, picking up as we go into spring along with demand. This year, with many moving on, rental growth will be gradual but not universal as some regions will find tenants are either financially stretched or supply levels elevated over others, which are not.
Sellers ask for more
Sellers jumped the gun, asking 2.8% more on Rightmove in January than they did in December, up 0.5% on average annually. This optimism was based on the belief that there is pent up demand following a year of economic uncertainty and budget caution being removed as interest rate falls.
The thing is, I don’t see anyone feeling flush. They may be able to borrow a little more but everyday outgoings remain on the rise. This rise is premature and will backfire. Stock levels remain high and a third of existing listings on the portal have already been reduced; expect more to follow. Price growth is not universal, northern regions and not all of them, may be on the rise but there are plenty of markets struggling to stand up. For example Camden, and Kensington and Chelsea, saw falls of 4% and 3% respectively last month. You can ask but you won’t always receive.
Northern First time buyers feel the benefit
The lender Nationwide found house price growth has fallen below the rate of earnings growth to 4.7 for first time buyers. This along with a steady decline in mortgage rates, has enabled first time buyers to bypass some of the affordability hurdles that once were obstructing progress. For those looking up North, Yorkshire & The Humber and Scotland, mortgage payments as a share of take-home pay were slightly below their long-run average enabling greater movement. In contrast, despite affordability improving significantly in London, it still remains the least affordable region to buy. This has left many first time buyers reliant on calling a friend or relative for a helping handout or wait 9 years to save up for the average 10% deposit, rents permitting. As opposed to 4 years for a first time buyer saving in the North.
London continues to make false starts
According to data compiled by Molior, rising construction costs with decreased demand and an absence of buyer trust resulted in only 5,547 home starts in the UK capital last year. A far cry from the 88,000 new homes a year needed. Moving forward there appears to be little improvement with only 14,053 homes expected to be completed in 2027 and 2028 — a 92% shortfall.
Country house prices slowly stabilising
For those who escaped to the country post-pandemic bidding against other outsiders, increasing prices, the trajectory of house prices over the past year or two will have been difficult to swallow. According to Knight Frank, country prices are now 13% below their last peak in Q3 2022. However, with price drops slowing to 0.7% in Q4, it would appear the decline is bottoming out. This will come as a relief to sellers and provide clarity, when bidding, to interested buyers.
Ground rents prove rocky
Angela Rayner threw down the ground rent gauntlet at Starmer’s feet. Challenging him to cap ground rents and face off investor and pension fund lobbying or risk losing the public’s belief that anything can change.
The London Prime Market reports falls in both sales and rental prices
Off the back of increased taxation via changes to the non-dom regime and budget whispers stirring up further fears. Activity in the London prime market fell 11% alongside prices; down 18% on the previous year. With 2024 in the rear view mirror, buyers are making their move, taking advantage of picking up a postcode at a discount. Mayfair being their location of choice closely followed by Chelsea and Kensington if Q4 data is anything to go by.
Meanwhile in the rental sector: an increase in supply from those who wouldn’t compromise on their sales listing price has led to a decrease in rental returns in prime London. LonRes data reported an annual drop of 0.6%, in rental prices in prime central London as new instructions soared by 59.1%; a 36.6% increase in stock when compared with last year.
UK Unveils £15 Billion Warm Homes Plan for Energy Upgrades
Energy Secretary Ed Miliband announced the government’s £15 billion Warm Homes Plan to upgrade up to five million homes with insulation, solar panels, heat pumps, and batteries over five years. This will offer £7,500 in upgrade grants, promising to provide an annual saving per home of £1,000.
Rental growth slowed as house price inflation picked up, driven by stronger transaction levels in northern markets
Average UK monthly private rents increased by 4.0% in December down from 4.4% in November 2025. In England, private rental annual inflation was highest in the North East (7.9%), and lowest in London (2.1%). Affordability is dictating the scale of further rises.
This was mirrored in sales. Average UK house prices were estimated to have increased by 2.5%, to £271,000, in the 12 months to November 2025, led by growth in Northern Ireland (7.1% in Q3 last year), Scotland (4.5%) and the north east (6.8%) over the course of the year while London saw prices fall by 1.2% as a result of buyer caution and affordability constraints.
The buy-to-let sector makes a subtle comeback
An increase in yields, up 7.1% in Q3 2025 and a decrease in rates, averaging 4.85 per cent, saw many landlords staying the course and remortgaging. Whether this was due to an inability to sell or because they thought they’d weather the financial storm in the hope of long term returns remains to be seen. New legislation will bring change; for tenants this should provide security but if Landlords are further tested they won’t give the market a second chance. For some landlords however, they remain committed, pivoting investment to more affordable areas with higher yields, which led to a 22.7 per cent increase in investment worth 28.2 per cent by value.
There was a welcome reprieve for investors in serious arrears, with those owing more than 2.5% of their outstanding balance falling by 850 to 10,420 in Q3 2025. However, exits continued, with buy-to-let possessions rising 28.6% year-on-year to 900 cases.
The north/south house price divide
What a difference a year makes. According to Zoopla 70% of homeowners in Northern regions of England, Scotland and Northern Ireland saw their homes increase in value while six in ten homes fell in value over the year were in Southern England. Northern outliers were Aberdeen, with 67% of homes reporting price falls, along with 40% of homes in Lancaster, and 46% in Ceredigion in Wales. Similarly there were outliers in southern regions where prices rose; 20,800 homes in Castle Point in Essex saw price value gains along with Waltham Forest where 59% of homes saw increases of £26,600 on average. Overall, London struggled to make any headway but for the few that did they achieved the UK’s highest average price increase of £17,400. This is a clear case of the gems shining through the dross overloading the portal shelves.
Commercial property holds steady
In spite of Budget jitters causing demand to falter, commercial property in Q4 held up. The Industrial sector outperformed other sectors in both leasing demand; up 11% year on year and demand to invest up 12%. Investment in Leisure however turned chilly, both demand and supply freezing. Leasing demand in London also saw some of the biggest falls; the City of London falling -24% and Westminster 8%.
Prime central London has more to give before it finds its feet.
Savills forecasts that house price growth in the prime London market won’t return until prices have fallen another 2% over the course of 2026 and 2027. Meanwhile Outer prime, they expect to stabilise this year but prime regional markets will start to reclaim what they lost as domestic buyers make their move, now 2025 speculation is in their rear view mirror.
When insulating the vulnerable only leads to them being further exposed
Eco4 and the Great British Insulation Scheme backfires for 300,000 homeowners leaving the taxpayer to fix the faulty insulation solution.
That concludes this week’s UK Property News Recap 23.01.2026. Any comments or suggestions please get in touch.
