London's weakness is a buy signal

Hi there,

This is Chubby Wallet. The newsletter that’s making you look smart about property..

Here's what’s in store..

• General market update

• Why prime London prices have stagnated..

• A primer on the Renter’s reform act

• The burger flipper who now owns the West End

Despite persistent inflation and evolving economic signals, the UK property market shows surprising resilience.

Resilient property market activity

Recent data indicates robust activity in the UK property sector.

• Strong Sales: Gross property sales (before any deals fall through) reached their highest point since late May 2022.

• Positive Indicators: Listings, net sales, and the rate of deal cancellations are all showing positive trends, according to market analyst Chris Watkins.

Housing costs

While overall inflation remains a concern, there are signs of moderation in housing-specific costs.

• Owner occupier housing costs (OOH): This specific component within CPIH, representing the costs of owning a home, increased by 6.9% year-on-year, a decrease from 8% in January.

• Inflation outlook: While the Bank of England forecasts a return to 2% inflation by 2026, some analysts are skeptical, suggesting 3% may be a more realistic target for the near future.

Regional property dynamics

• North east: Led with 14.3% year-on-year growth.

• Other northern Regions: Strong performance over 9%.

• London: Remained an outlier with a modest 0.8% growth, potentially nearing a "bottom" after years of relative underperformance.

Regional rental highlights

Northern regions (excluding Yorkshire and the Humber) maintained strong rental growth around 9%.

London posted a significant 8.4% rental increase.

Politics and taxes

A leaked memo from Angela Rayner to Rachel Reeves outlined several proposed tax increases aimed at avoiding welfare cuts

Proposed measures include:

• Reinstating a bank corporation tax surcharge

•  Closing the Commercial Property Stamp Duty Loophole .

These aren't random tax grabs—they're targeted at sophisticated property structures.

If you're using company ownership for tax efficiency, October could be expensive.

Mortgage rates

Current 5-year swap rates: 4.142%.

That translates to:

• Residential mortgages (60% LTV): ~3.85%

• BTL mortgages (75% LTV): ~5.85%

The Bank of England's Chief Economist confirmed rate cuts were too fast.

Translation: We're not going back to 2% mortgages. This is the new normal, not a temporary spike.

Our take

• North East: +14.3% property vs +4.7% wages = 9.6 percentage point gap (affordability issues loading)

• London: +0.8% property vs +6.2% wages = 5.4pp wage premium (massive buying power increase)

• South East/South West: The actual sweet spots with strong wage growth (5.7%/5.3%) and reasonable price growth

Contrarian play: 0.8% growth in London after years of underperformance may signal the market has bottomed out…this presents a buying opportunity factoring in the market’s liquidity, strong wage growth and long term prospects.

London’s most prestigious postcodes are struggling…

What the data is saying..

According to TwentyCi, some boroughs like Kensington and Chelsea and Westminster are seeing price declines of 25–29% since their peaks.

It's not just price drops. Homes are staying on the market longer (some over 200 days), falling through more often (up to 35.5% in Marylebone), and getting hammered with price cuts before they even secure a buyer.

In concrete terms:

• Average discount to asking: 3.9%

• Fall-through rate: 25.5% (above national average)

• Days to sell: 89 (vs 84 nationally)

• Completion rate in Central London: 37% (vs 55% UK-wide)

So why the slump?

1. The price of money has changed: Forget the days of 1% mortgages. the cost of capital is much higher than in the 2021 days. And buyers are thinking twice — and negotiating hard.

2. Tax squeeze/political uncertainty: From non-dom tax rule changes to brutal stamp duty surcharges (up to £113,750 for overseas buyers on £1m properties), the UK is no longer the low-tax haven it once was for foreign buyers.

3. Overvalued listings: Many homes are still being listed 20% above market

4. Buyers are bored of bidding wars: The days of joining 15 other eager buyers for an open house on a Saturday morning are a memory,” says Pryor.

In other words, FOMO has been replaced by wait-and-see.

Opportunity in the dip?

While everyone’s crying over falling prices, smart investors might see an opening.

This isn’t 2008-style distress, but it's the closest thing London's high-end market has seen to a clearance sale in a decade.

If you're sitting on liquidity and playing long-term, the dislocation in seller expectations could be your entry point.

So, where do we go from here?

If rates fall later this year, expect a gentle tailwind — but not a full-blown boom.

If government tax policy softens, especially for overseas buyers or downsizers, demand could stabilize.

If the global rich return, particularly from Asia and the Middle East, prime London may rise again.

But this won’t be a rocket ride like 2020/2021. It’ll be more like a slow climb.

Final thought

Think of prime London property as a luxury watch at an estate auction. The prestige hasn’t vanished. The value is still there..

For long term investors with cash, it may be a once-in-a-decade buying window

Picture this: You wake up one morning in 2026, and every single one of your tenancy agreements has transformed overnight.

No warning. No opt-out. Welcome to the new world.

That's the Renters' Rights Bill.

On "Commencement Date" (likely 2026), every Assured Shorthold Tenancy magically becomes an Assured Tenancy.

Think of it like a software update you can't decline, except it changes everything about your business model.

The domino effect

Fixed terms? Gone. Forever.

Six-month student lets? History.

Section 21 evictions? Gone

Your portfolio just became a collection of indefinite tenancies that only end when tenants decide to leave or you prove grounds for eviction.

It's like switching from chess to poker—completely different rules, completely different strategy.

Bidding wars are over

Remember those rental auctions where desperate tenants bid £200 above asking? The government just banned the whole game.

New reality check:

Advertise at £1,500? That's your ceiling, not your floor and Tenants can offer less, never more.

Want six months upfront? Tough—one month maximum

Rent increases? Only via Section 13 notices (and tenants can challenge these at tribunal)

Section 8: Your new best friend

With Section 21 in the graveyard, Section 8 becomes your only eviction route.

But here's the problem—to prove grounds for possession is like proving negligence in court. You need evidence, proper procedures, and patience.

The new grounds include:

• Ground 1A: Selling up (but re-let within 12 months and face £7,000 fines)

• Ground 1: Moving in yourself or family

• Traditional grounds: rent arrears, antisocial behavior, breach of contract

Think of Section 8 as moving from automatic transmission to manual—it works, but requires skill, timing, and a lot more effort.

The pet question

Landlords must now allow pets unless they have "valid objections." But what constitutes "valid"?

The calculation:

Refuse pets → potential discrimination fine

Accept pets → higher insurance, deposits capped, damage risk

Neither option is obviously superior

The new minefield

"No DSS" and "No kids" policies are now illegal. — this might actually increase discrimination, and make it more subtle.

Instead of transparent policies, landlords will find creative excuses:

"Sorry, you failed our credit check" becomes the new "No benefits accepted."

The unintended consequence: Legitimate benefit claimants might face more rejections, not fewer, as discrimination goes underground.

Phase 2 penalties

These will likely kick in mid to late 2026 when all existing assured shorthold tenancies (AST) will convert to the new periodic tenancy system under the Act.

• Landlord database: Every property, every certificate, every detail will be required to register nationally. Up to £40,000 in fines for non compliance.

• Mandatory ombudsman: It will be mandatory to join a property ombudsman group. Think of it as insurance you're forced to buy for a service you might never use.

• Awaab's law: Strict timeframes for fixing hazards like mould to be enforced.

Here's the brutal reality landlords are facing

Reduced control + increased compliance costs + unlimited tenancy duration + capped rent growth = ?

Answer: Margin compression and potential market exit.

We're likely to see a supply shock as smaller landlords liquidate portfolios. Basic economics suggests this reduces rental stock, pushing up rents for remaining properties.

The law designed to help tenants might actually make renting more expensive and competitive.

The bottom line

The Renters' Rights Bill isn't just regulation—it's market evolution accelerated by government intervention and it will eliminate the weak and strengthen the survivors.

The question isn't whether these changes are fair or unfair—they're happening regardless. The question is whether you'll adapt to the new reality of the rental market.

Six-year-old Asif Aziz arrived in London from Malawi with nothing.

By 16, he was flipping burgers at McDonald's and sneaking into property auctions. When a relative took him to one in South Kensington, Aziz lied about his age and dropped £1.9 million on a building opposite the tube station.

Most teenagers buy their first car. Aziz bought his first empire.

The deal that changed everything

Aziz moved to Angola in 1993 and built two food manufacturing companies from scratch.

When he sold Golfrate Angola in 2005, that single transaction generated enough capital to return to London and establish Criterion Capital. 

Within years, he'd assembled a £3.6 billion property portfolio and become the biggest landowner in the Leicester Square-Piccadilly Circus corridor.

The lessons

• Age is just a number—audacity is everything. While his peers were studying for GCSEs, Aziz was making million-pound bets. The market doesn't care about your birth certificate; it cares about your capital and conviction.

• Geographic arbitrage beats local optimization. Aziz didn't grind his way up London's property ladder. He exported his skills to Angola's emerging market, captured outsized returns, then imported that wealth back to prime real estate. 

  “Sometimes the shortest distance between two points isn’t a straight line”

The kid who started flipping burgers now flips entire city blocks. In physics, potential energy converts to kinetic energy at the moment of release.

Aziz's genius was recognizing that moment—and having the courage to let go.

That's it for this week folks. Each week we'll cover strategies, updates and insights to help you succeed in real estate. We love this stuff!

If you Have questions or just want to chat, We want to hear it.

See you next time in your inbox!

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