Rates Cut From 5.25%, But Stalled. The Market Is Waiting.
The Bank of England cut rates four times in 2025, bringing the base rate down from its 5.25% peak to 3.75% by November. Then it stopped. As we enter 2026, rates have been held for two consecutive meetings and the next MPC decision falls in February. The question the whole market is asking: will they cut again, or hold?
The answer matters enormously for property investors. With inflation running at 3.0% — above the 2% target — the Bank has very little room to cut. Their mandate is price stability, and cutting when inflation is elevated risks making it worse. The result is a market in a holding pattern: not expensive enough to collapse, not cheap enough to unlock the confidence needed for a real recovery.
Mortgage approvals in January fell to 59,999 — the lowest monthly figure since January 2024. Buyers exist, but they are sitting on their hands waiting to see what happens to rates. The market is moving but without conviction.
BoE Base Rate — The Journey From Peak to Plateau
Rates fell 150 basis points from peak. But they have stopped. The February MPC meeting will be the first test of whether cuts resume.
Source: Bank of England
The Renters Rights Act Lands in May. Landlords Are Already Reacting.
The Renters Rights Act received Royal Assent in October 2025. The operative date — when Section 21 is abolished and the new tenancy regime kicks in — is 1 May 2026. That is less than four months away.
For buy-to-let landlords, this is the most significant legislative change since Section 24 removed mortgage interest tax relief. Section 21 — the "no fault eviction" mechanism used by landlords to regain possession without needing a legal reason — will simply no longer exist. Landlords needing to sell or regain their property will have to use Section 8, prove a legal ground, and accept longer timescales.
The market is already pricing this in. Many landlords who were uncertain about the long-term viability of their portfolio are now making decisions. Those who plan to sell are trying to do so before May, while they still have the full suite of possession options. Those staying in are reassessing yields and risk profiles.
Mortgage Approvals — Monthly Trend
Approvals are below where they were a year ago. The market is not collapsing, but confidence is weak and buyers are waiting for clearer signals on rates.
While Residential Waits, Commercial Is Moving
The uncertainty paralyising the residential market has a different effect on commercial property. Local authorities that borrowed to invest in commercial assets during the low-rate era are facing refinancing pressure and selling. Pension funds holding secondary office and retail stock are offloading. The supply of distressed commercial property is increasing.
At the same time, the housing shortage has not gone away. The government's target of 367,000 new homes per year remains a distant goal. Construction is not filling the gap. The demand for residential space is structural and persistent — it does not respond to interest rate cycles the way buyer confidence does.
Class MA permitted development rights exist precisely to meet this demand. A qualifying Class E commercial building — a shop, an office, a clinic, a gym — can be converted to residential without full planning permission. Prior approval in 56 days. The value uplift from commercial to residential typically runs at three to four times. That opportunity does not require rates to fall. It requires the right building and the right knowledge.
