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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..

• Market update

• New rules cap ground rents at £250 p.a

• Prices in Central London set to fall further..

LATEST DEVELOPMENTS

LISTINGS DATA

New data shows higher property listings

It’s early 2026 and the UK housing market looks active – but the pressure is building under the surface. Stock is high, lenders are open for business, and rates are trending downwards. Yet most buyers are stretched, and the only deals moving are the ones priced to sell..
For investors, this is not a market for chasing momentum. It’s a market that rewards calm analysis, aggressive negotiation, and buying only when the numbers work.

The details:

• Supply is well above normal: There are about a third more homes for sale than you would usually expect at this point in the year. Buyers have choice. Sellers have competition.

• Price cuts are everywhere: Over 20,000 homes cut their prices in a single week. That is the highest level in ten years. What you see on Rightmove is often not what the home will actually sell for.

• Homes still sell if priced right: Sales volumes are solid. When sellers accept lower prices, deals get done.

• Many homes are sitting unsold: More than one in five listings have been on the market for over six months. Around 650,000 homes are empty. Owners are paying costs while waiting.

• More rentals on the market: Rental listings are rising each year. In some areas, rents are no longer growing and in a few places they are falling.

• Mortgages are available: Approvals dipped slightly but remain healthy. Rates are lower. Banks are willing to lend.

• Builders are under pressure: Construction firms are failing in large numbers. New homes cost over £430,000 on average. Many projects barely make money.

Why It Matters

This is not a housing shortage issue, it’s a cost issue. Rising costs are constraining developers and keeping buyers cautious. For investors, the risks are slower rental growth, higher refinancing costs, weaker exit price and added regulation. In 2026, buyers who secure assets below market value, keep leverage low, and plan multiple exit options will do well.

GROUND RENTS AND FORFEITURE

New rules cap ground rents at £250 p.a

According to Propenomix, the government’s latest leasehold reforms are set to hit ground rent investors hard. New rules will cap ground rents at £250 a year and reduce them to near-zero after 40 years. On top of that, landlords will lose the right to take possession of assets due to non-payment. Together, these changes weaken long-term income and make enforcement slower and more expensive.

The details

• Existing ground rents will be capped at £250 per year, with a built-in expiry after 40 years, effectively ending the asset class over time.

• Landlords will no longer be able to seize properties for unpaid charges. All enforcement will go through the courts under a new “fairer” system.

• Estate rent charges on freehold estates will also lose their enforcement powers under the Law of Property Act.

• Ground rent assets will need to be revalued immediately to reflect lower and time-limited income.

• Without forfeiture, freeholders must rely on slow and costly legal processes to recover unpaid charges.

• Cash flow in many blocks will become less predictable, increasing operational risk.

• The reforms are expected to transfer around £12.7bn from freeholders to leaseholders.

• Private equity is likely to bear much of the impact, with pension funds holding a smaller share.

Why It Matters

These reforms will put pressure on many ground‑rent owners and freeholders, especially private equity, which likely holds around half the market, and pension funds with smaller exposures. Falling income will push some to sell while others pursue legal challenges. This is likely to release distressed ground‑rent portfolios into the market. For people with capital, this creates a clear opportunity to buy from motivated sellers at discounted levels, provided they understand the lease terms, cash‑flow risks, and management demands.

LONDON UPDATE

PRIME CENTRAL LONDON UPDATE

Prices in Central London set to fall further

Bloomberg reports that London’s prime housing market has broken with a decade of optimism. The city’s most bullish brokers are now openly forecasting further price falls, admitting that tax, regulation, and shrinking buyer pools have reset the market. This is not a temporary dip. It is price correction in market that relied on global capital and favourable tax treatment.

The Details:

• Forecasts have flipped: Savills overestimated PCL price growth by more than 40 percentage points between 2015 and 2025; values fell instead. For the first time since the financial crisis, they now expect consecutive years of decline.

• Prime central London is deep into a lost decade: By the end of 2025, prices sat 25% below the 2014 peak, transactions above £5m were at their weakest since 2020, and some sellers accepted discounts of up to 50% to secure liquidity.

• Taxes are the core issue: Higher stamp duty, the new mansion tax on £2m+ homes, and the end of non‑dom advantages have permanently narrowed the buyer pool. International wealth has not disappeared — it has simply become more selective under today’s rules.

• The pool of global buyers has not replenished itself: Without previous tax incentives, demand has become highly price‑sensitive. Developers note that without current stamp duty levels, activity would be materially higher.

Why it matters

Prime London is now a market where buyers have more influence, as higher taxes and fewer overseas buyers are keeping prices under pressure. At the same time, very few new homes are being built, and the development pipeline is far below what the city needs. Demand for the best office space is also rising, as London’s AI sector expands. This combination means there will be less new housing and strong commercial demand in the years ahead. For investors, this creates a chance to buy at sensible prices start to rise again..

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.

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