UK house price growth slows to 1.8%
3 weeks ago
Housing market remains weak as landlords leave and buyer demand falls
12:01 AM, 13th August 2026, 1 week ago
17
Categories:
The rental market remains constrained by a lack of supply as some landlords choose to leave the sector.
The latest RICS UK Residential Survey for July 2026 points to a subdued housing market, alongside continued shortages in rental stock.
Landlord instructions remained firmly negative at -27%, with survey feedback indicating that some landlords are reducing their portfolios or exiting the rental market altogether.
Tax and regulation still deter investment
According to the data, tenant demand was broadly flat in the three months to July, with a net balance of -1%, down from +12% previously.
However, despite softer demand, expectations for rents remain firmly positive. A net balance of +28% of respondents expect rents to rise over the next three months, compared with +25% previously.
RICS member comments from across the country repeatedly voice concerns that taxation, regulation and affordability are influencing landlord and tenant behaviour.
One member of RICS told the survey: “Demand continues to outstrip supply. Good property lets almost immediately with minimal voids, but new landlord instructions remain hard to secure. Rents are firm and edging upward. Tax and regulation still deter investment, though the ruling out of rent controls removes one uncertainty”.
Tom Bill, head of UK residential research at Knight Frank said the RICS survey reveals a dramatic drop in supply.
He said: “The Renters’ Rights Act appears to be doing the opposite of what was intended by increasing the financial squeeze on tenants. Supply has fallen and asking rents have risen as landlords face greater financial risks under the new legislation, which for now is proving largely counter-productive.
“Future changes to the minimum energy performance of rental properties may aggravate the situation unless implemented with care.”
Housing market remains subdued
In the sales market, the summer slowdown continued in July, with new buyer enquiries recording a net balance of -28%, unchanged from June. While still firmly negative, this represents an improvement from the recent low of -41% recorded in March, suggesting that the pace of deterioration in demand has eased.
Meanwhile, agreed sales registered a net balance of -30%, also unchanged from the previous month and somewhat less negative than the -37% recorded in April.
The national house price balance came in at -30%, a marginal improvement from -32% in June and the recent low of -35% in April.
RICS chief economist Simon Rubinsohn explained that while a summer slowdown is not unusual in the property market, a combination of wider economic and political factors is continuing to weigh on sentiment.
He said: “The housing market remains subdued, and while that is not usual over the summer months, it is clear from the RICS seasonally adjusted data, that the combination of geopolitics, the domestic political climate and the cost of mortgage finance are continuing to weigh on sentiment.
“Significantly, the forward-looking metrics also remain downbeat, which is not the sort of climate likely to encourage housebuilders to step on the gas on existing sites or in land-buying, as highlighted in recent trading statements from developers.”
Regional differences remain significant
The data also reveals regional differences remain significant. London, the South East and South West continue to report more negative price balances than the national average, whilst respondents in Northern Ireland continue to report rising prices.
After a sustained period of stronger growth, price momentum in Scotland also appears to be flattening.
Expectations for prices over the coming three months remain weak, with a net balance of -31%. However, respondents are slightly more positive over a twelve-month horizon, with the balance standing at +4%.
London stands out as an area lacking confidence, with year-ahead price expectations deteriorating to -23% in July, from -10% previously.
Industry reaction to RICS survey
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Although thankfully not as quiet as a few months ago, the market is not seeing signs of a ‘Burnham Bounce’ – yet.
“It may be down to the time of year, but fewer listings mean the relatively low number of proceedable buyers have less choice, which is slowly increasing the pace of decision making.
“However, the market remains price sensitive so generating buyer traction remains challenging, particularly while uncertainty about possible mortgage rate increases continues.”
Gareth Lewis, deputy CEO of specialist lender MT Finance, said “The market is still stagnant with little movement and low transaction volumes. With a lack of competitive tension in many transactions, property prices aren’t shifting much either way. If you get the right property in the right location then this is not the case, but few meet this criteria.
“The market still badly needs some stimulus and requires more people to transact. Interest rates were expected to fall this year but that outlook has changed with the Bank of England holding base rate for several months. It is not an easy market.”
Comments
Have Your Say
Every day, landlords who want to influence policy and share real-world experience add their voice here. Your perspective helps keep the debate balanced.
Not a member yet? Join In Seconds
Login with
or
Member Since January 2023 - Comments: 341
9:47 AM, 13th August 2026, About 1 week ago
Andy Pandy has a plan. CGT to 40% for all and then us older LLs will be forced not to sell due to large tax bill so rental market be stablised. Simples!!!
Member Since May 2018 - Comments: 2436
10:12 AM, 13th August 2026, About 1 week ago
CGT to 40% for all would do a lot of collateral damage, especially with Rachel Reeves IHT changes coming in next spring: Labour proposals will trigger the usual flight of capital; that’s what a left-wing government is most effective at doing (other than U-turns).
Nobody should be surprised that rents are going up: The Labour Renters Rights Act is putting rents up.
Member Since March 2024 - Comments: 310
10:31 AM, 13th August 2026, About 1 week ago
Reply to the comment left by Beaver at 13/08/2026 – 10:12
If we get CGT tax rates aligned with income tax rates I just can’t see it working for anyone (sellers of assets or the Treasury) without some form of indexation or taper (like we have had in the past).
This speculation has cropped up at every Budget over the last few years and it is interesting to note that the top CGT rate has been lower for residential property sales under both Hunt and Reeves than it was following Osborne’s 8% surcharge putting the higher rate at a total of 28%.
(Hunt cut the surcharge and then Reeves abandoned it whilst putting the higher rate at 24% for all normal disposals).
Whilst acknowledging that politicians don’t always make rational decisions (look at the RRA) it does appear that sensible voices in Whitehall have pointed out to previous Chancellors that just aligning rates will make asset sales fall off a cliff not least due to the effect of double taxation (40 or 45% CGT then 40% IHT).
There are plenty of lefty think tanks and politicians with no practical experience of anything but politics clamouring for alignment and of course the public at large can’t generally grasp the full picture as many of them happily enjoy principal primary residence relief and think that anything that hits landlords is brilliant.
It will be a sign of idiocy off any previous scale if Burnham’s Chancellor announces alignment with no reliefs plus a long list of new spending from the so called extra revenue that will never materialise.
Member Since January 2024 - Comments: 405
10:52 AM, 13th August 2026, About 1 week ago
The elephant in the room is not being able to rent again for 12 months. Complete idiocy when there is a shortage of rental properties!
I was trying to sell, but the market is bad, so I am deferring to next year to see if it is any better (I don’t need to worry about CGT rates).
Member Since May 2024 - Comments: 157
12:29 PM, 13th August 2026, About 1 week ago
Reply to the comment left by Keith Wellburn at 13/08/2026 – 10:31
A shame that when they talk about ‘alignment’ between CGT and income tax they forget to align the £12570 per year that is a part of earned income..
Member Since July 2013 - Comments: 506 - Articles: 1
12:51 PM, 13th August 2026, About 1 week ago
Reply to the comment left by Crouchender at 13/08/2026 – 09:47
Bang on the money! 100%
Member Since July 2013 - Comments: 506 - Articles: 1
12:53 PM, 13th August 2026, About 1 week ago
“Tom Bill, head of UK residential research at Knight Frank said the RICS survey reveals a dramatic drop in supply.
He said: “The Renters’ Rights Act appears to be doing the opposite of what was intended by increasing the financial squeeze on tenants. Supply has fallen and asking rents have risen as landlords face greater financial risks under the new legislation, which for now is proving largely counter-productive”.
Crikey, and they never saw this coming!
Member Since October 2020 - Comments: 1317
1:17 PM, 13th August 2026, About 1 week ago
The article suggests that Angela Raynor’s ruling out of rent controls is giving landlords some confidence, but I wouldnt be surprised to see Burnham over-rule her and introduce them nationally as he is under pressure to do so from several quarters. If not that, then give Councils or Mayor’s the right to do it locally, then he doesnt have to take the flak.
Member Since January 2023 - Comments: 341
2:34 PM, 13th August 2026, About 1 week ago
Reply to the comment left by DPT at 13:17
Burnham will play the ‘fairness’ card for rent control (he will get away with it as claiming it is a ‘ temporary’ rent freeze) as he is spinning with locating Asylum seekers in more affluent HMO areas even if it costs tax payers more. Bottom line is don’t trust Labour – whether they are so called ‘soft left or soft right’ load of nonsense- they are plain socialists FULL STOP or should I say KINNOCKISTS!
Member Since May 2018 - Comments: 2436
4:25 PM, 13th August 2026, About 1 week ago
Reply to the comment left by Crouchender at 13/08/2026 – 14:34
There is a great deal of extreme-left-wing-commentary around in the UK at the moment. Here’s one bit from the iPaper:
https://inews.co.uk/opinion/retirees-renting-out-rooms-is-proof-they-can-afford-to-downsize-4026730
This says that the growing trend of retirees renting out rooms (using the rent a room scheme) is proof that they could downsize and proposes an ’empty-bedroom tax’.
We have had similar taxes in our history. There was a window tax:
https://en.wikipedia.org/wiki/Window_tax
The windows tax resulted in windows being bricked up.
Margaret Thatcher had the poll tax and that did not work out well either:
https://en.wikipedia.org/wiki/Poll_tax_(Great_Britain)
Some of this extreme left-wing commentary is extraordinarily ignorant. If you are two retirees in a three-bedroom or four-bedroom house then some of the time the children or grandchildren are coming to stay. Some of the time you have live-in carers. Some of the time you have guests. Often you need to stay where you are because of family or transport links, or access to healthcare. I.e. the empty rooms are needed.
Families needing access to schools aren’t the only people who need something and if you’ve spent 50 years paying NI and paying off your mortgage, why should you downsize because of government failure or because of somebody who didn’t work for 50 years?
But a lot of these left-wing commentators miss the point: You cannot tax your way to economic growth and without economic growth the burden of debt that this government is building up is not sustainable.