Welcome to This Week in Property, your essential update on the latest UK construction and property news.  The UK property and construction sector has faced a turbulent week, with political upheaval at the top of housing leadership, mixed signals from the housing market, and fresh challenges for the construction industry. While new appointments in government and signs of recovery in property transactions offer cautious optimism, data on construction activity and materials production highlight ongoing pressures. At the same time, the rental market, affordable housing initiatives, and new policy developments continue to shape the landscape for investors, developers, and tenants alike.

Political drama in housing leadership

The property sector experienced significant political upheaval this week with Angela Rayner resigning as Housing Secretary over a stamp duty scandal. Rayner stepped down after failing to pay sufficient stamp duty on a property transaction. Industry leaders have warned that her departure does “little to reassure” investors during a crucial period for housing policy.

Steve Reed has been appointed as the new Housing Secretary, taking on the challenge of implementing the government’s ambitious housing targets amidst ongoing concerns about planning reforms and housing supply.

Housing market shows signs of recovery

Despite political uncertainties, the housing market is displaying positive indicators:

• New property listings have hit a seven-year high amid growing buyer demand, suggesting increased confidence in the market.
• House prices are edging upward as easing borrowing costs boost buyer confidence.
• The lowest London outmigration in more than a decade indicates renewed interest in urban living.

However, challenges remain. UK Finance warns that relaxed stress tests will likely see mortgage arrears rise, and there’s speculation that upcoming property tax changes may already be impacting house price growth.

UK construction struggles

The construction sector shows contrasting signals:

• Construction PMI remains “stuck in reverse” according to the latest data, with activity still “well below” neutral figures, though showing mild improvement.
• UK cement production has fallen to a 75-year low, reports The Construction Index, indicating fundamental challenges in construction materials supply.

Major development projects moving forward

Several significant development projects received approvals or made progress:

• Tower Hamlets approved the Orchard Wharf masterplan, advancing a key London regeneration project.
• Dorchester Living submitted plans for a 9,000-home Heyford Park scheme, one of the UK’s largest housing developments.
• Willmott Dixon secured a £15.3m Catterick town centre redevelopment contract, adding to their portfolio of regeneration projects.
• Bouygues won the contract to build Exeter University halls, reinforcing their presence in the education sector.

Rental market trends and affordable housing

The rental sector continues to see significant developments:

• Rental competition is higher in towns than cities, according to Property Wire, indicating changing preferences among renters.
• HMO landlords are making double the rental income of individual property landlords, highlighting opportunities in shared accommodation.
• Record rents persist as landlords brace for reform and tax changes.

In affordable housing news, Thriving Investments and Gresham House have invested £38m in Gloucestershire affordable homes, while BluePine Living has launched an affordable housing platform to address supply shortages.

Policy and regulation updates

Several important policy developments occurred this week:

• MPs had the final say as the Renters’ Rights Bill headed back to the Commons, marking a crucial stage for rental sector reform.
• Councils called for an end to permitted development rights, citing concerns about quality and planning control.
• The housebuilding industry published a blueprint to tackle chronic undersupply of housing.
• Propertymark called for a review of taxation by the Scottish Government to support housing investment.

Industry experts warn that the November budget statement could prove to be “one of the toughest second budgets in living memory”, with significant implications for property and construction.

Mixed signals amid political change

This week’s property and construction news paints a picture of an industry experiencing both challenges and opportunities. While political instability creates uncertainty, market indicators suggest a gradual recovery in housing transactions and development activity. The construction sector continues to face headwinds.

As the new Housing Secretary takes office and the industry prepares for a potentially tough budget in November, stakeholders will be watching closely for signs of policy direction that could shape the market for years to come.

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