UK Property Market 2026: What to Expect

As we look to the year ahead, buyers, renters, landlords, lenders, businesses and stakeholders - albeit all with different priorities - will be hoping for a smoother, less eventful year which will allow them to pursue goals and see real progress in the property market. 

Development Finance - Looking to scale up

Developers will be hoping that 2026 is the year of growth, as confidence begins to return and the market presents increased opportunities. 

While uncertainty and a lack of progress, especially with planning reforms, plagued growth efforts in 2025, developers remained agile and resilient against the challenges and will be turning their attention to scaling up in the year ahead. The removal of planning red tape and the Government's previous pledge to greatly increase the number of planners has so far failed to come to fruition. However, the Autumn Statement has renewed focus on planning reform, with further commitments aimed at accelerating development.

This target has forced the Government to ease planning restrictions in some cases which has made local authorities more permissive, and a focus on brownfield and grey-belt land should provide additional opportunities for developers. Revised National Planning Policy Framework reforms - should they come into play - would also go some way to streamlining the planning process and removing frustrating obstacles often faced by developers.

While 2025 presented developers with a tough economic climate, the view for 2026 is somewhat more positive.

• According to Shawbrook’s data:
  48% of developers believe the current economic outlook for the year is positive, with a further 36% expecting it to improve
• Nearly three quarters (74%) have the confidence to invest in their business in 2026
• 69% expect Government plans to contribute to growth
• Strategic partnerships are emerging as a key theme, with 89% of developers having either formed, or currently exploring, partnerships

Real Estate - Professionalisation at the forefront

For professional landlords, 2025 was the year of agility and diversification. While rising costs, a lack of quality supply, and profitability concerns forced some small-scale landlords to sell-up, this further drove the professionalisation of the market and prompted many professional landlords to diversify from traditional single rentals. Instead, many shifted to other property types which offer higher yields and allow professionals to build stronger cashflows. 

The mix of property types considered in 2025 appears to have shifted, with a greater proportion of activity relating to HMOs and commercial property than in previous years. Overall market activity has remained mixed.

Semi-commercial property remains present within this activity, with food-related premises (including cafés, restaurants and takeaways) among the more frequently represented types. This reflects the composition of activity rather than a concentration in any single asset class.

As we look ahead to 2026, this is a trend that looks set to continue. With tax changes set to kick in from 2027, professional landlords will be looking to shift towards higher yielding assets to combat the impact of any increased taxes and maximise their profitability. 

Professional landlords will also need to be aware of Making Tax Digital (MTD). Starting April 2026, landlords with an income over £50,000 must use government-approved software for quarterly tax reporting, marking a major shift in how rental businesses are managed. As a result, it’s likely we’ll see further professionalisation of the market, as professional landlords remain agile and resilient, while more and more small-scale landlords exit the market.

Retail Mortgages - Modest growth and market stabilisation

Following a sustained turbulent period, the mortgage market finally began to stabilise in 2025, as inflation gradually started to ease and interest rates were cut late in the year.

Despite challenges, the start of the year also saw strong house buying activity - driven largely by first-time buyers acting swiftly before the end of stamp duty exemption. 

Though mortgage rates should begin to creep down in the wake of interest rate cuts, projected lending for house purchases looks set to be modest in 2026, as affordability challenges hold a firm grip on the market. Following a 22% growth in lending for purchases in 2025, UK Finance forecast a more modest growth of 2% this year.  However, this is likely to be somewhat offset by remortgaging activity. As a large wave of fixed-rate mortgages come to an end, growth appears set to be driven by remortgaging activity in 2026.

Though mortgage rates should be relatively competitive this year, concerns still remain for first-time buyers. Following the removal of stamp duty exemption, there are currently no new incentives or support initiatives in place - and no changes seemingly on the horizon. This continues to divert demand towards the rental market, and the ambitious target of 1.5 million new houses built will play a significant role in alleviating rental pressure and shaping the market in the year ahead.

What lies ahead for UK property market?

The residential market is shifting towards a buyer’s market, while the buy-to-let market becomes further professionalised. Retail mortgages should become more competitive, and as rates come down, buyers should be provided with some much-needed breathing space when it comes to affordability and competition. For developers, the year will be defined by planning reforms, increased activity in sectors such as build-to-rent, and a shift towards more sustainable, energy-efficient properties.

All in all, the outlook for the year is a focus on resilience, opportunity and modest growth.