UK Real Estate and the new PM – what do we know so far

About a month ago, I wrote an article about what Sir Andy Burnham being Prime Minister might mean for UK real estate. Now that we are a week into the new regime, with so much having happened, it feels more like ten weeks, what do we know and what is coming down the track?

1. Housing is important

   It seems that housing will be at or near the top of the Government's domestic policy agenda as it looks to get Britain on a pathway to growth. 

   Two ministers, John Healey (Chancellor) and Angela Rayner (Housing) have been brought back into Cabinet in key positions. They are each experienced in the real estate sector and understand its role in driving growth. The question is will they be able to implement the policies needed to deliver that goal. 

   To the relief of many in the real estate sector, it seems that rent controls are off the table. There has been much commentary on how when introduced in other countries, such as Scotland, rent controls have failed to achieve their desired goals. The lobbying efforts of  industry bodies against such a policy appear to have been successful.

   It has been confirmed that the target of 1.5m new homes during this Parliament is still in play, even though there were only 143,100 housing completions in England, the lowest level since 2015-1016. To get anywhere near this "difficult target" (as described by the Housing Minister), institutional investors will need to be heavily involved. At all times, but in particular during challenging ones, those investors look for stability. It is hoped the policies adopted reflect that as well as delivering practical support, such as a quicker planning process. 

   Furthermore, a critical factor in achieving that target, beyond the increasing costs and the viability issues, is finding the people to actually do the building work. There are currently less than 2,000 small housebuilding companies in Britain, with more than 9,000 having gone out of business since 2008. 

2. Business Rates Cut (for some)

   As expected, business rates for pubs, clubs and live music venues have been cut by 20% in an attempt to protect Britain's working-class culture. This change will come into effect in April 2027 and was said to be a “first step” in helping businesses. In good news for owners of logistics properties, this rate cut will not be funded by their rates increasing. Instead, there will be a review of the tax reliefs of those businesses that do not make a positive impact on local communities e.g. vape shops.

   Reduced business rates during this challenging period are welcome, but this particular policy is expected to apply to about 32,000 businesses. For now, there is no wholesale change to the business rates system that some were hoping for. However, a review of business rates is still on the agenda and that is something to monitor in the lead up to the Budget (October/November 2026).

3.  Property Taxes — no news yet

   We are yet to hear of any changes to the property tax regime and are unlikely to until the Budget. Based on previous speeches, amongst the possible changes that may impact investors, homeowners, property companies and developers are:

   • council tax being replaced by a flat rate property tax
   • stamp duty being replaced by a land value tax
   • the “Mansion Tax” threshold of £2m being reduced
   • capital gains tax rates being brought into line with income tax rates.

   With the potential changes mentioned being highly sensitive and there being other matters higher up the “to do” list, it is unlikely that all of these changes will be brought in at once. However, advisors in the sector will be on the lookout for hints in the lead up to the Budget as to which, if any, of the above may be pursued. 

   4. London and the regions

   With much of the talk of the past week being about bringing investment and opportunities to places outside of London, it was interesting to see some of the findings in a report by CoStar on office construction in the UK. It reported that in the UK, in the 12 months to the end of June 2026, work began on just under 4.5m sq. ft. of office blocks, the lowest level since 2004. 

   The biggest slowdown has been in the regions, with almost three quarters of all office space under construction being in London. London has also seen significant rental growth in the past six years as the flight to quality continues and tenants seek prime space that is in short supply. Office rents in London can exceed £100 per sq. ft. whereas, according to Savills, in Manchester, in the summer of 2025, rent for the top offices was £45 per sq. ft.

   One of many challenges facing sponsors and policymakers will be convincing institutional and overseas investors of the benefits of investing in UK real estate outside of London, at the very time that London is looking to consolidate its position as a leading global business center.

   It's early days for the new Prime Minister and his Cabinet. The signs so far are that we can expect plenty of activity that will impact the real estate sector.