How Andy Burnham is forcing global investors to rethink UK real estate

Market Realities, Macro Pressures, and the Regional Divide 

The UK residential property market is navigating a structural rebalancing, characterised by shifting buyer leverage, regional price divergence, and adapting consumer priorities. 

Average asking prices for newly listed properties dropped by 2.0% to GBP 364,999, surpassing the ten-year average August reduction of 1.3%, while housing supply reached a 12-year peak. 

Despite this pricing adjustment, mortgage approvals rose to 58,200 in June, and net mortgage borrowing surged to GBP 7.7bn, signalling underlying financial recovery. 

A sharp North-South split has taken hold across the UK, with northern asking prices rising by 1.5% annually, led by a 1.9% increase in the North West, while southern asking prices fell by 1.8%. 

In central London, house prices fell by 25% over the past year due to broader economic volatility linked to the conflict in Iran, alongside uncertainty surrounding a planned 2028 mansion tax on homes over GBP 2m. 

Private rent growth across the UK moderated to an annual rate of 3.3%, bringing average monthly rents to GBP 1,388, with regional variations ranging from a 6.3% increase in the North East to just 2.2% in London. 

Regulatory updates, including Making Tax Digital, EPC standards, and the Renters' Rights Act, have wiped out GBP 48bn in rental property value and driven 93,000 landlords from the market, forcing remaining landlords to prioritise tenant retention over aggressive rent increases.

Consequently, buyer evaluation criteria have pivoted toward total value for money, running costs, EPC ratings, outdoor space, and home-working potential. 

Meanwhile, ongoing leasehold uncertainty has pushed the price gap between houses and flats to a 30-year high, with houses costing 1.7 times as much as flats after house prices rose 43% since 2016 compared to just 10% for flats, placing intense focus on an upcoming September parliamentary window for leasehold reform and consultations on a GBP 250 ground rent cap.

Political Realignment, Fiscal Pressures, and Devolution 

Political market dynamics stabilised following Andy Burnham taking office as Prime Minister, which helped restore gilt market calm and triggered a 5% post-entry surge in buyer demand. 

By ruling out property tax changes in the upcoming October Budget, the administration removed pre-budget hesitation, temporarily setting aside proposals for a Land Value Tax or a Proportional Property Tax that left-leaning think tanks estimate could add GBP 7.5bn annually to London's tax bill. 

A central pillar of the government strategy is an initial GBP 10bn allocation from the ten-year, GBP 39bn Social and Affordable Homes Programme, designed to deliver over 70,000 homes outside London, with the capital set to receive a separate GBP 6bn allocation at a later date. 

In a pragmatic departure from campaign pledges of 100% social rent, the policy designates 60% of funding for social rent homes and 40% for alternative tenures such as shared ownership, accommodating local council capacity constraints. 

This intervention addresses acute housing shortages, with official statistics showing over 134,000 households, including more than 177,000 children, living in temporary accommodation, and 1.34 million households on council waiting lists. 

Council housebuilding had dropped to an average of just 2,000 completions annually leading up to 2025, down sharply from historical postwar peaks of 103,000 to 200,000 homes per year. 

Through an expanded devolution framework, regional mayors will receive direct funding, call-in planning powers, and a share of business rates. 

Furthermore, the government is evaluating proposals that would grant mayors discretionary authority to restrict Right-to-Buy sales, which spiked above 14,000 in early 2026, reversing decades of centralised control and empowering municipal housing delivery.

Opposition parties, including Conservatives and Reform UK, have criticised the spending and advocated instead for restricting social housing access for foreign nationals. 

Planning Frameworks, Delivery Gaps, and Sector Impact 

Planning policy has undergone a parallel transformation with updates to the National Planning Policy Framework, introducing a default "yes" for residential developments within walking distance of well-connected transport hubs. 

This fast-tracking measure responds to acute delivery pressures highlighted by recent Housing Delivery Test results, which revealed that 31% of English local authorities now face the tilted balance presumption in favour of sustainable development, including 65% of councils in London and 47% in the South East. 

National housing delivery remains under severe pressure, as current completion rates of 203,000 homes per year lag far behind the 300,000 annual pace required to meet the national target of 1.5 million homes by 2029. 

While the updated framework offers 25-year spatial planning horizons, brownfield density flexibility, and support for SME housebuilders, representative bodies such as Real Estate:UK emphasise that planning reform alone cannot guarantee project viability, suggesting that high development costs, cumulative tax burdens, and the removal of specific Build-to-Rent (BTR) targets threaten scheme completion. 

Nevertheless, private landlords exiting due to regulatory pressure are opening discounted acquisition opportunities for institutional investors to build large-scale portfolios, while private housebuilders, local authorities, and central government officials must align strategies to navigate lingering technical, financial, and planning hurdles.
 

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► See full details of all residential panels at Europe GRI 2026 - Summer Edition, as well as more on the “UK - Liquidity leader or structural outlier?” panel, set to feature moderator Daniel Woolston (Addleshaw Goddard), along with Charles Allen (Fiera Real Estate), David Pralong (Maya Capital), Justin Faiz (Pluto Finance), Kirill Zavodov (PIMCO), Puneet Kanuga (EQ Group), Rory Allan (Brunswick Real Estate), Thomas Blangy (QuadReal Property Group), and Thomas Lloyd Jones (Zenzic Capital).