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This is Chubby Wallet. The newsletter that teaches you how to profit from property trends before they go mainstream..

Here's what’s in store..

• UK landlords face £50b EPC upgrade bill

• Ageing population to lift the UK living sector

• Mortgage rates on a downward trend in 2026

LATEST DEVELOPMENTS

NEW EPC RULES

UK landlords face £50b EPC upgrade bill

The UK's requirement for rental properties to meet EPC Band C by 2030 is triggering a potential mass exodus of landlords and significant rent increases, with industry experts quantifying what anxious grassroots landlords feared—4.6 million homes needing £10k average upgrades at a £50bn total cost that will hit tenants and taxpayers hardest.

The details:

• Property expert Russell Quirk broke down the math: 56% of the UK's 4.6m private rental homes sit below Band C, requiring roughly £10k per property in upgrades with estimated 5–10% rent increases passed through to tenants according to NRLA modelling.

• NRLA CEO Ben Beadle warned that 31–40% of landlords are considering selling up, potentially removing 500k–1m rental units from the market while court possession delays stretch to 12 months and yields compress by 0.5–1.5% on non-compliant properties.

• Reform UK's Richard Tice MP challenged EPC reliability, citing 20–30% rating discrepancies between assessors and their poor fit for Victorian properties (40% of rental stock), where solid-wall insulation runs £20k–£30k with payback periods stretching 15–50 years.

• Additional complications: These include conservation area restrictions devaluing properties 10–15%, rural properties with E/F ratings facing £713–£1,400+ annual energy bill premiums, and assessment errors like missed loft insulation artificially inflating poor ratings.

Why It Matters

The UK's proposed EPC C minimum for private rented properties phased from 2028 (new tenancies) to 2030 (all) creates tension between net-zero goals and rental supply. Landlords face fines up to £30,000 per breach or jail, forcing them to upgrade (often £10k–£30k, with a proposed £15k spend cap), sell to owner-occupiers (shrinking PRS and lifting rents), or accept lower yields. For proactive investors, this disruption delivers clear upside: ECO4 grants cover up to £15k–£30k subsidies, green mortgages cut rates by 0.1–0.3%, and compliant properties could earn 1–2% yield premiums.

LIVING SECTOR

Ageing population to lift the living sector in 2026

The UK living sector is shifting from a housing shortage story to a demand-quality story. Population growth now depends on migration, households are ageing, and new supply remains hard to deliver. For investors, returns will come less from price growth and more from owning the right living assets in the right places, with stable income and resilient demand.

The details

• The population is getting older fast: ONS projections show the number of people aged 65 and over rising by more than 20% by the early 2030s. The 85+ group is growing fastest, and this is the cohort most likely to need care, assisted living, or adapted housing.

• Supply is far behind demand: The UK has a chronic shortage of age-appropriate housing. Only a small fraction of older people live in homes designed for mobility, care access, or support. New development is slow due to planning friction, high build costs, and local opposition, especially for care and supported living schemes.

• Care needs are increasing, not optional: As longevity rises, the average number of years spent needing some form of support also increases. This underpins steady demand for care homes, extra-care housing, and supported living, largely independent of the housing cycle.

• Funding is shifting toward private provision: Public funding is constrained, pushing more care delivery toward private and mixed-funding models. This favours professional operators and investors who can provide modern, compliant stock and run it efficiently.

• Returns are driven by income, not prices: Later-life living assets behave more like operating businesses than traditional housing. Cash flows come from long-term occupancy, indexed fees, and needs-based demand rather than capital appreciation. This makes them less exposed to interest rate swings and house price volatility.

• Professionalisation creates scale advantages: Regulation, staffing requirements, and compliance costs are rising. Smaller, poorly capitalised operators are struggling, creating acquisition opportunities for investors who can bring capital, systems, and operational expertise.

Why It Matters

The ageing population creates one of the clearest long-term demand drivers in UK real estate. Unlike conventional residential property, care homes and supported living are not dependent on buyer sentiment or mortgage availability. Demand grows simply because the population structure is changing. Investors who focus on well-located, modern, and well-run later-life assets can build durable income streams with less reliance on house price growth.

INTEREST RATES UPDATE

FINANCE AND MORTGAGES

Mortgages to ease as UK bond rates drop

UK mortgage rates are falling, with the Bank of England cutting the base rate from 4.00% to 3.75% in December 2025. Lenders like HSBC, Nationwide, Halifax, and Barclays have responded with lower fixed and variable rates. For investors in the living sector—care homes, supported living, and build-to-rent—this creates a rare window to secure cheaper debt, lock in long-term income, and leverage demographic-driven demand.

The Details:

• Rates are dropping: Two-year fixed mortgages now average 4.44–4.83%, and five-year fixes sit at 4.50–4.99%, with some best-in-market deals below 3.5% for low-LTV borrowers (60%).

• Refinancing frees cash: 1.5–2 million mortgages reset each year. Borrowers moving to lower rates can save £200–£400/month, improving affordability and reducing forced sales risk.

• Buying power improves: Lower rates mean investors can borrow more for the same income. For new living-sector acquisitions, 75% LTV financing at <5% is now possible, improving internal rates of return to 8–12% in regions like the Midlands and North.

• Transaction volumes are set to rise: Lower debt costs and confidence support a 10–15% increase in transactions in 2026, providing liquidity and entry points for investors seeking operating assets.

• Property prices should rise modestly: Nationally, house prices are forecast to grow 2–4%, with regional variation: – North England, Scotland, Wales: 3–5% – London/South: ~1%, constrained by high prices and fiscal headwinds

• Living sector yields are attractive: Senior housing, care homes, supported living, and BTR projects offer 6–8% yields, with occupancy growth of 15–20%, underpinned by ageing demographics and limited supply. Regulatory tailwinds may further improve income security.

• Supply remains the bottleneck: New housing completions (~200–240k/year) lag demand (~300–350k needed), especially in age-adapted or supported living stock. This structural shortage drives income growth and rental resilience.

Why it matters

75% LTV mortgages can lift leveraged BTL returns toward 8–12%, especially in the North & Midlands where yields remain ~6–8% and many expect modest 3–5% price growth in 2026. Reduced borrowing expenses should improve affordability and transaction flow, but the window may narrow quickly if sentiment or policy shifts. Worth watching closely.

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!

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