Sunday Supplement 7 Sep 25 - All change

“Let it work, For 'tis the sport to have the enginer Hoist with his own petard; and 't shall go hard” - Hamlet, Act 3 Scene 4, Shakespeare This week’s quote goes straight to the deep dive and the genuinely seismic events of this week in parliament which led to the resignation of the Housing Secretary, Angela Rayner. Before we go into this week full hammer - Rod Turner and I will be running our next Property Business workshop on Wednesday 1st October, in London - subject matter this time is Investment, with an emphasis on what metrics you really need to be considering to run your property business properly, and building your business to scale. We’re digging into the real fundamentals of property investment for growth—from proper valuation and strategic debt structuring to the investment metrics serious pros use (hint: ditch ROI and yield). Learn why some deals work for some and not others, how to manage risk as your portfolio scales, and when to shift gear from side hustle to scalable business. We’ll break bottlenecks, build strategic pillars, and unpack real-life case studies of fast company growth. How have we done so many deals? We’ll tell you! Book the SUPER EARLY BIRD tickets with 20%+ off, now: http://bit.ly/pbweight Let’s plough on with Trumpwatch. What’s going down stateside? Trump’s favoured pick for the Federal Reserve (Stephen Miran) advanced through a senate hearing this week. He would fill the last 4 months of the term left open by the resignation of a Georgetown professor last month. The fear (and it gets political very quickly, as always) is that this compromises the Fed’s independence - I’ve commented many times before that the Government appoints the officials (same as in the UK when Jeremy Hunt appointed Clare Lombardelli to be Deputy Governor, but the snap election prevented the Tories from actually being in power when she went into post anyway!). The process is the same - the person carrying out the process is different, which is why we are watching closely! The labour market figures in the US were weak, leading to a moderation in bond yields around the world on Friday afternoon. Expectations were 75k jobs added, real numbers were 22k jobs added in August (very small numbers for the US, but then it is August). There were whispers in headlines of a huge revision downwards for the year for jobs created as well - seems that the ONS is not the only one under the microscope for revising data these days! The president also petitioned the Supreme Court to overturn a lower court’s ruling that declared many of the emergency-based tariffs illegal. He talked of “economic catastrophe” if the tariffs were rescinded. Japanese automakers and the average $2,403 price increase per vehicle sold in the US were the ones in the spotlight this week. The used car market will look more attractive! Approval ratings are falling - the primary issue, which tends to happen to the best of them, is that the simple economic truths stated early on that are based on mathematical identities have an annoying tendency of holding up. We all know you can’t make a drug “1000% cheaper” - depending on how much you like or dislike Trump will depend on whether you allow any “poetic licence” or not! When you apply significant tariffs, pretending they won’t put prices up is just silly, though. They will - the only question is “by how much”. Cost-of-living issues in polling are scoring an approval rating of 24% - dangerously low. Good old “Big, Beautiful Bill” isn’t looking so beautiful, the worse off you are. The macro data shows weak jobs (OK, as I always say - one month, but there’s a trend) - growing unemployment (up to 4.3% now), and inflation on the rise (impossible to divorce from the tariff situation). 38% of the public are polled as expressing confidence in Trump’s economic leadership - even though consumer spending appears resilient and corporate investment remains strong. There was also a nice little din-dins this week with Bill Gates, Mark Zuckerberg and the likes hosted by the president. After the dinner, Meta and Apple both pledged $600bn each in AI and tech investments - eye-watering numbers. The clear message - the administration is aligned strategically with the tech sector - running the winners as far as the “magnificent seven” are concerned, which wouldn’t appear to be rocket science but nevertheless makes sense. OK - back to the real time UK property market. Chris Watkin delivers once more - Week 34 in the can. Listings printed 29.1k, as this report was from the bank holiday week. My “10% more stock than a normal market” ready reckoner is still working on the back of circa 2 years of overperformance in listings compared to historical averages. We are 10.6% ahead of the 9 year average, but that does include 2020 which pollutes the figures somewhat. We are really inching back towards the 2024 numbers now, week by week, having been 6-7% above them at various points in the year - but we are still listing more than we are selling (as always), so it is all eyes on the withdrawal rate as a general rule. We are only 2.7% ahead of the 2024 listings YTD now, and 7.2% ahead of the 2017-19 average. A mere 17,500 price reductions in week 34, 14.1% being August’s official number (which was the same as July’s), with 14% reduced in June, compared to last year’s 12.1%, May’s 13.4%, and the 5-year average of 10.6%. More stock, more reductions - absolutely and relatively. 33% more reductions than the 5 year average, if you take the difference between 14.1% and 10.6%. “25% more reduced properties than a normal market” also works as a ready reckoner. One in seven properties on the market are being reduced each month (so we are currently running at perhaps 90 to 95 thousand price reductions per month, to be clear!). Can’t find a deal? Just keep the legwork up and you’ll get there. You don’t tend to see 14%+ of stock being reduced in strong markets, by any stretch. Holidays slowed things a little but sideways pricing continues…….and now we are back in the termtime swing after the August clearout, next week’s figures will be interesting. 21.3k homes sold subject to contract, again against the backdrop of the bank holiday. The 2025 average is 26,200. Healthy is still the best description. SSTCs are up 6.1% year on year and 13% on 2017-19, and still nearly keeping pace with 2022 (which to this point had only just started to cool after a white-hot start to the year). With SSTCs up 6.1%, whereas listings now are only up 2.7% on last year, this signifies more transactions than 12 months ago, to this point in the year, for sure - or, put a different way, comparatively this looks like a more functional year than 2024 was (even though stock numbers have continued to rise throughout the year). We went into August with 763,178 homes on the market - around 5k up on July’s number. For context, as the market got stickier before the pandemic that number was c. 660k, a sellers’ market is more likely to be under 600k. At the end of July 2024, 716k were on the market. These are more “higher high” numbers and so the “flat” feeling as I’ve been saying for some time now will likely continue to manifest itself in a steady market without much excitement as we get through the school holidays. It’s the second month in a row of not moving too far forward though - fewer than 1% more homes on the market compared to the month before - it feels like we are nearing or are already at the peak? We can’t read too much into August’s activity anyway but there’s always an extra surge in September when the school holidays are over, alongside a clearout of “no-hoper” stock where vendors mostly can’t take the medicine that the corporate agents are trying to prescribe for them - so we likely need to see those figures before drawing conclusions, as they could be somewhat different this year with just so much stock out there - hopefully we will have them next week. Chris also looks at the per square foot on sold STC properties - it has a very strong correlation with prices that hit the land reg in 5 months’ time. This time round - July was at £344.78/sqft and that was 1.97% higher than July 2024 and 3.85% higher than July 2022. It was down around half a percent on June’s SSTC number of £346.45, I think we are holding on to about a 2% - 2.5% up market for 2025, a little under my prediction (3.75%) and also below inflation, wage rises and the likes. At the risk of the broken record - sideways, sideways, sideways. Again, waiting for August’s numbers next week. Fall throughs trickled back below the long-term average of 24.2%, printing 24.1% - relatively normal “noise”, there’s still been very little volatility around the long-term average for many weeks now. The net sales are still there or thereabouts - 16.2k, 5% up on last year and 9.8% higher than 2017-19 - not quite at 2022 levels (about 17k behind, now, total) but let’s see where we get to by the end of the year - I think it will be a close run thing on transaction volume compared to 2022 in a much less volatile year. I always give Chris a weekly shout out here because he’s more prolific than “just” this epic tome he releases weekly on the UK property market - he comes up with some great stats on a regular basis. Drop him a like, subscribe, and all the rest of it and some kind words for his content creation. If you are in the industry and want support in growing your business or to be a more effective communicator/be more in touch with your local market - that’s his core business - give him a shout. The article gets published on the Property Industry Eye website, and the video on his YouTube channel - @christopherwatkin

Over to the Macrotastrophe - that’s what it is constantly painted as, of course, but when you step back you see growth that’s been OK (I am keen to point out that where that growth has come from is the problem, and the unsustainable part) - poor employment progress, and problematic inflation that’s just about under control. It really isn’t as bad as the press are making out - which won’t surprise anyone. This week we’ve had the Nationwide house price index, the Bank of England Money and Credit Report, and the final August PMIs. Those three are stalwarts. We then have to look into the gilts and swaps as you know - especially as things have been rocky on the longs, particularly, over recent weeks (which, again, far too much has been made of when you look at the actual makeup of the debt - although some of the questions being asked, including of the Bank of England, are absolutely the right questions!).

Nationwide’s House Price Index. The world ended once more (yet carried on, strangely) as another drop was announced. This time round - yep, the colossal 0.1% drop (last month was a +0.5%, for context). This brought the Nationwide annual figure down to 2.1% from 2.4% in July. What did Nationwide have to say? They looked at some interesting stats this month, which they don’t often do on the months that are not the end of a quarter. Their Chief Economist talked of subdued house price growth, and once again referenced high house prices with respect to household incomes (I would maintain that the wrong data is generally looked at here, but that’s another soapbox for another day). They mentioned their expectation that house price growth would continue to be outpaced by income growth, which will improve affordability gradually. They also point out the very obvious that rate cuts will lower mortgage rates (although as I’ve been banging on about, the 5-year rate hasn’t moved downwards a jot in well over 12 months now - the 2 year has adjusted downwards and is of course more sensitive to the base rate than the 5-year!). Nationwide pointed to their recent research report on the housing stock in England (amusingly named Lock, stock and new solar panels). Stock is up 9% in the past decade, up to 25.4 million homes, with over half of them classified as “under-occupied” - and energy efficiency has improved. There’s perhaps a significant surprise here - the total housing stock increased by 2.1 million dwellings, and the 9% was above the rate of population growth in England over the same period (which was 7%). Get your head around that! Their report (which is based on the English Housing Survey, the bible of such data) therefore highlights (from the 2023 numbers) - 64% owner-occupier, 19% privately rented, 16% socially rented. Flats are now 42% of the privately rented stock, up from 38%, and 45% of the socially rented stock (“now” being a proxy for 2023, of course!). For owner-occupiers, flats are only 10% of stock. Imagine if you take “flat-dominated” areas out of that - areas of London, for example - when looking outside of the capital or the M25, flats owned and lived in would be in the single figure %, of course. This, contextually, is news to me - not that it isn’t intuitive, because it is - but the scale of the difference is interesting. This speaks to (in my opinion) why capital growth in flats has been lower in recent years, and tells you why flats often struggle on the market - owner-occupiers have a huge preference for freehold, I’d suggest, and can afford it (don’t forget, the average owner-occupier household has an income of £60k, compared to £35k for a household that is renting - that huge divide in averages speaks as to why one owns and one does not, unfortunately, more than any of the other factors). How about the floor area? That’s improved from 95.3 square metres to 96.2 over the decade being analysed. Flats are smaller (by 1.7%) over the period, coming down to just over 60.3 square metres. The biggest increase is in terraced houses, up 3.6% in space terms; then semis up by 2.2%. There isn’t much difference between the space in an averaged terrace (91.9 sqm) and the average semi (99.1 sqm). If you slice it the other way, the average owner-occupier property is 112 square metres. The average floor area for a rental is 76 square metres for private and 65 square metres for social - we saw last week how social stock is shrinking in bedroom size, when it comes to right to buy replacements, and so we’d expect that to be dropping not increasing. Regarding bedrooms, though, the bigger headlines are in occupation. “Under-occupation” is actually classified as having 2+ spare bedrooms, which 53% of owner-occupier properties do. This is to do with the average age of owner-occupiers, I have no doubt. 87% of owner-occupier properties have 1+ spare bedroom (so only 1 in 8 use all of their bedrooms). This 53% figure comes down to 16% in the PRS, and instead in the social sector 8% are qualified as “overcrowded” (more people than bedrooms based on standard definitions, such as children over 10 of different genders sharing rooms - so basically, according to the LHA defining rules). How about EPCs - well, you see why the drum bangs as it does. 72% of social properties by 2023 were rated C or above - the number in the PRS was only 48%. Owner-occupiers, however, were at 49%. Let’s not decry the progress from 2013 to 2023, though - in 2013 only 23% of dwellings were at C or above, whereas now it is over 50% (admittedly dragged right up by the social sector!). 1.1% of dwellings use a heat pump as their main heat source (and this breaks back to 7.6% rurally, and only 0.5% in urban areas) - so more of a reflection to the restriction on the gas network than anything else - and now 6% of dwellings have PV panels, with over 15% of properties built in the past 10 years having panels. 7% have an EV charger, with 20% of the properties built in the period in question have a charger installed. An interesting segue on the Nationwide report this month, which was most welcome. The only other part that caught the eye was the 3-month-on-3-month chart, showing a drop of around 0.4% in pricing. It isn’t clear whether this is seasonally adjusted or not, but it shows a correction after the stamp cliff much more clearly, since there was a 3-month climb rate at over 1.5% just before the time of the stamp duty change. The Bank of England Money and Credit Report, then. This is reporting on July’s activity. Net borrowing was up to £4.5bn for the month, which is a healthy month in the context of the past few years, and mortgage approvals, which is the stat that always gets reported on, were at 65,400. I benchmark a faster market at 70k+, but over 60k is healthy and 65k was “the lower end of normal” between 2014 and 2019. Mortgage lending is bumping along, increasing by 2.9% year-on-year, up from 2.8% in June. Remortgages decreased a little, to 38,900, which is still much higher than it was a year or so ago. Net borrowing for consumers carried on at roughly a similar rate, £1.6bn up from £1.5bn in June. The growth rate is large, but the cutback in Covid was very significant, so this is perhaps still a bit of a lag - however, 7-8% consumer credit expansion is not a long-term sustainable number of course. Large businesses are borrowing 8% more money than a year before, year on year; SMEs are up by a massive 0.9%, although this is the largest growth rate since August 2021 (!) - shows you what has been going on but also the restrictive nature of interest rates on the private sector side of the economy. The money supply also underwent another “healthy” increase of £7.1bn, which is down from June’s large £11.4bn, but in keeping with an inflationary environment. The details that I like to draw out - the rate of debt on outstanding mortgages is 3.88%, and the rate on newly drawn mortgages is 4.28% (the latter is down from 4.34%). So, we are seeing that gap still close but not be closed yet. The crossover will be an interesting point in time, which still feels like it will be sometime around the end of 2026 (depending on rate movements, of course). Timed deposits, on the other side of the fence, fell to 3.84% in July (down 18 basis points) - so this is for locking money away for a period of time. Instant access was at 1.89% down from 1.91%. The bigger businesses are paying 5.8% on average for their debt - SMEs are at 6.41% - these are down 14 and 10 basis points respectively. Business deposits attracted 3.7% on timed deposits and 2.25% on instant-access. Last of the triumvirate this week - the PMIs. The flash numbers were good - how did the finals work out? Once again better than the flash numbers, which is great news. We don’t get a flash number for construction, though, so let’s start there as the construction index cratered last month and printed under 45 (44.3), which is rare in the UK and notably bad outside of a clear time of crisis. The headline gives us a clue, as usual: “Sustainted downturn in UK construction output reported in August”. Well, it would always be like that, you might think - the pace HAS slowed since July, but still printed 45.5, which is very clear contraction territory. That will drag on GDP for Q3, for sure. 8 months in a row of falling activity, solid reductions in new work and employment, and optimism at its lowest level since December 2022 (yes, you know why that was back then). This is the longest continuous downturn since early-2020, the Economics Director tells us. This was a “partial easing” of the speed of decline. July’s fall was the fastest in over 5 years, so that’s not a ringing endorsement. Commercial work showed resilience (47.8), residential was 44.2 (ouch) and civils were at 38.1 (critical). Delivery time shortened, subbie availability improved (naturally) and price inflation hit a ten-month low, on the bright side. All this is pretty typical in times of lower activity, of course. Only 34% of the panel consulted expect a rise in output in the next 12 months (down from 37% in July). This looks and feels now like a “construction recession”, and from the PMI perspective (but not the GDP perspective) those boxes would be ticked with 8 months in a row below the 50-handle for this PMI. The rest was better news, though. Sort of. Manufacturing contracted from the flash number (47.3) to print 47. A 3 month low - a mild contraction of production volumes, and job losses registered for the tenth month in a row. The sector outlook was described as “very uncertain” and everyone is scared of Government policy (understandably, given recent form). The budget is now being cited as the next big thing - as I suspected (date now set, 26th November, strategic apparently, giving time for the gilt yields to calm down a bit - I wonder if it is more about the Treasury influencing the OBR over changes in policy and how “good” they will be for growth, because 0.1% in a year is worth such a lot of money over the forecast period). Services - happily, as the big engine in the UK economy - had a much, much better time. A great headline - steepest upturn in service sector activity since April 2024. 53.6 on the flash numbers, up from 51.8 the month before (which isn’t a terrible print) became 54.2. That’s a really healthy print that could carry both manufacturing and construction to a composite print of 53.5 (from a flash of 53, and a prior month of 51.5). Output growth accelerated, a rebound in new order intakes, and business optimism at a 10-month high. It was described by the Economics Director at S&P as a “welcome acceleration” and a “swift rebound”. The New Orders Index saw the largest one-month gain since March 2021. This is indicative of a “decisive improvement” in customer demand. Hiring trends however “remain subdued” and “a focus on automation and investments in productivity improvements” have helped to alleviate pressure on margins. Make people more expensive and companies will innovate and look elsewhere, exactly as you would expect, it seems! It ended though, of course, with continuing concerns over the budget; the composite index’s 53.5 print is a one-year high - but right on the river - job shedding persisted, and hiring freezes are continuing as at the same time firms are reporting spare capacity and pressure on margins due to rising payroll costs.

Gilts, in that case - and quite a week given the often boring nature of gilts. I’ve said before, however, a boring week with a decay of about 0.03% in the yields is a week that suits me, and us all, down to the ground, pretty much!

If you’ve followed the “headlines” that have emanated from the gilt market this week, I don’t think you would believe it if I told you that the yields were down; but they were. We opened at 4.127%, which given the market path of interest rates over the coming years does look on the high side, especially if you are on the “recession” bus (I’m not, by the way) - and closed at 4.054%. So, forget my boring 0.03% decay - this was a flamboyant decay of 0.073%! The boring tale of the tape is that gilt yields are struggling worldwide, because most countries are struggling with their own debt piles, government spending and are also heavily influenced by the USA (struggling with a huge deficit, once you cut out all the noise). The UK has its own problems which were well characterised in the OBR 50-year forecast earlier this year - demographics (age of population), birth rate, and lack of productivity growth alongside health of the population in general (correlated to age, but well below its potential at this time). Too much spending for what it is generating? For sure. However, Friday’s events which were the weak job numbers being released as referred to in Trumpwatch upped the probability of a US rate cut, which impacted our own yields by around 0.05% on Friday afternoon. The 30s were the ones that were actually making all the headlines - the long term future hanging in the balance without a plan to control Government spending or sort out long-term productivity issues. We opened at 5.619% yield, and climbed to yet another 27 year high of 5.756% yield in the early trading on Wednesday. Since then the yield has, relatively, absolutely crashed back to 5.508% (which still seems high to me!). That’s a pretty huge move without any particularly seismic long-term news that’s specific to the UK, 25 basis points (per year, for 30 years - 7.5% difference in simple interest returns over the period in under 3 days). You can see - in spite of the headlines, this is an 11 basis point drop over the week and the yield curve actually got a bit shallower. That’s what we want, ultimately. You could, if cynical, look at the budget announcement on Wednesday morning and question whether it was to calm the gilt markets, or whether it just fueled that speculation and the “bond vigilantes” just kept selling gilts because why was there around a 4-week or so delay to the expected date? The only reason (in the void) is that the current sums don’t add up, and they won’t without breaking the manifesto pledges (again). Or…..perhaps they need more time to influence the OBR about just how good their policies will be at promoting growth, a cynic might say? This is the game, you see. Persuade the OBR to put an extra 1% of growth in their forecast over 5 years, or even 1.5% (only adding 0.2% here and 0.3% there, doesn’t sound huge) - and that black hole that has been speculated at £50bn+ goes away. Whether you think it is true or not. The average budget over the past 2 decades has seen an annual swing of £20bn either way on available funds - some might remember back to the Sunak and Hunt budgets where I regularly commented on the “wind being behind them” - forecasts were miserable coming out of Covid, whereas more recent commentary around the OBR has been that their forecasts are too bright (however, I was in the camp of under 1% GDP growth this year, and ultimately, we are already at 1% after two quarters, even if I would dispute what’s actually caused that growth - and now we have great service sector PMIs). Everyone involved in the equation will be hoping that no-one focuses on the OBR’s own assessment of their predictive capabilities - on average overestimating growth by 0.3% over 2 years and 0.7% over 5 years in recent times. In reality, we absolutely need that to continue - or Reeves does - because as and when that comes to an end, the black hole expands ever further….. The “game” - in gaining the 0.2% of GDP by the end of the forecast period, and 0.4% within 10 years - in the planning changes that Labour scored, and the OBR played ball with, was submitting to the OBR an explicit model, with well-defined measures, we are told in parliamentary notes. Can the same be done for the financial deregulation that Reeves has kicked off after asking regulators what they are going to do about growth? Nice work, if you can get it - finds money from thin air. The OBR is also ultimately bound by what the IMF, OECD and the likes say; they cannot be too far above those bodies, otherwise they lose credibility. Having said that, when the OBR releases their EFO (economic and fiscal outlook) on November 26th, they will by definition be the most recent forecast. Both of those organisations will release an updated figure before the budget - the OECD were at 1.3% for 2025 and the IMF at 1.2%, last time out - in March, the OBR released a 1% forecast (down from 1.9% in 2024’s forecast). The current school of thought would be revisions back upwards, however. I would certainly expect the OBR to be coming up to more like 1.5% as they tend to be optimistic - they will not be able to ignore the inflation rate or the unemployment rate, however - and you’d think it would be easy for the aforementioned organisations to make an accurate forecast when well into the last quarter of the year, but it doesn’t normally work out like that. Perhaps that’s a third reason for budget timing; the first quarterly estimate for Q3 GDP is due on 13th November, and the PMIs were finalised on Wednesday morning at 930am (just before the budget announcement) - I’d suggest there’s no such thing as coincidence, here. It’s one factor rather than the driver, though. So - as you might be able to sense, that was more of a gilt segue than a deep dive. It was my planned deep dive for the week, but I could not let the resignation of Rayner go without significant commentary; so - she wins this week by losing, and off we go. Firstly, I feel pre-contracted to release the actual truth, which has concerned an alarmingly small amount of commentators. I’m sick to death of people who are purported experts in this, that and the other getting the facts of this case wrong. The facts are: the Stamp Duty Rules are clear here. I’ve said many times before, Stamp is not overly complex. Let’s be fair - this case in itself is complex, much more than an average person, because a trust is involved (normally critiqued as the preserve of the rich, of course). However, the interest in the trust and the beneficiary being a minor, regardless of anything else, makes it clear that additional home stamp duty is due in this case. How about the “it’s an honest mistake, guv” defence? I actually believe that is probably the case, but the mistake here is that when you are the deputy prime minister (let alone someone who has spent many hours criticizing MPs from the other side for tax avoidance) - you pay for specialist tax advice when you are paying a massive chunk one way or another. You get a barrister or similar. You are not being held to the same standards as a member of the public, and have volunteered for that, and been very outspoken about it generally. That then leads to a mistake on the SDLT return, and we get to where we’ve got to. I reflected midweek that this is what “people like me” care about. The truth, and the technical detail. Typical nerd. I was sent several memes, and AI videos (including a rap one) which captured much more cleverly what the supporter base (some now former, I’m sure) of Ang were thinking. She’s got more than one house. She (at the time) had her grace and favour ministerial Westminster residence. Then a posh flat in Hove. Then this Ashton residence. “How many houses can Rayner buy?” chanted the video. Reading social media commentary from what looked like genuine public accounts, this was the line that took off (I’m sure supporters might claim that was started by Russian bots, or the right wing media - very difficult to establish the veracity of that). It does make sense. The one self-styled big profile Labour politician, one of “their own” - with an £800k house. Outwith of the wildest dreams of the vast majority of her supporter base, I’d suggest. This is a “perception is reality” reminder. Even after the event many so-called experts being asked to comment are still getting the facts wrong. How have the centre-left commentators responded to this? Some speculation as to when Ang might be back - hence this week’s image. I’d suggest “she’ll be back” alright. It isn’t without precedent on either side (back when there were only two sides to the equation, even if it looks like we are seeing the complete breakdown of the 2-party system at this point) - Peter Mandelsson came to mind immediately - back from the Blair Government (and is of course still around) - he took 10 months on the sidelines. Milburn and Blunkett were probably the highest profile of the others from the Blair era. Michael Gove, Amber Rudd, Sajid Javid from the past 10 years were all returning ministers after departing from their posts. Now - not all of them left because of a ministerial code breach, of course - but again, I don’t think there’s too many that care too much about the detail. It will trigger another replay of all of these videos of Starmer saying “we will do the right thing”, etc etc, and be more fuel to those who believe in the “two buttocks of the same behind” argument - but, it just depends how you see Rayner as fitting into the setup. My initial analysis was that Starmer hasn’t had a bad week at all. Rayner was far and away his biggest pressure point from a personal perspective in the current setup. She was incredibly popular, and the nailed-on favourite to be the next Labour leader - with only Burnham polling anywhere near as well as her (and he would need to win a by-election first of all, of course). Wes Streeting is now in that box seat instead. It was also very much rumoured that Sir Keir didn’t like her much. It isn’t only Starmer who has had a good week on that basis, however. Rayner was by far the wildest card had she been elected party leader. It’s very difficult to say just how much the ship might have lurched to the left; although many choose not to follow this logic, this current iteration of Labour is very central at the top level - the parliamentarians are not, which is why they destroyed the welfare cuts ambitions. Streeting would, if anything, move the ship further to the right. Uncertainty is exactly what investors don’t like, for a reason, remember.

So what for housing, and for government policy in general? Again, the analysis on this seems to be rather light. You can read the articles that have just been overjoyed at the downfall of Rayner - I wouldn’t waste any emotional energy on that. The facts around her now struggling with that mortgage and the likes don’t give me any satisfaction (her pay cut is around £67,500 per year). Yep - she’s still on £94k, so I understand there are no violins on any side for that, but I’d guess a mortgage of £3k+ per month and three kids to think about.

Is this the excuse that at some point is needed for missing out on the 1.5m homes target? I’m not sure. The new housing secretary, Steve Reed, has moved over from Environment, Food and Rural Affairs. He was for 6 years the leader of Lambeth Council, which will give him a London-focused but real world view of housing, you’d expect. I’d suggest this is a huge job. When the new Government, when they were new, published their 40 major bills in the King’s speech (which I analysed at the time) - and the housing side was significant, but the devolution side (which I haven’t touched on a lot) was also hugely ambitious. This is where it gets interesting, as far as I see it from outside of the fence. The left and those who lean left within the civil service - which we are often led to believe is the majority - know that the centralised system of Government that has become more centralised since Thatcher - is too centralised, and their arguments on that front are pretty coherent. There’s so much power in the Treasury when it comes to actually deciding whether things get done. On the flip side, many who don’t look at what council tax is actually spent on (the 99%, you might say!) worry about day to day local matters such as potholes, which is why it is smart to concentrate on those issues to win votes (even though the vast majority of budgets are spent on children's services and social care, and housing of course). Reform is very clearly leading the way with their messaging on these matters. What’s the overall “plan”? Well, there was a white paper from 16th December - Power and Partnership: Foundations for Growth. We know what we have been seeing in the wider media about combined authorities, there was also a designation of “strategic authorities” in there, and structural reforms too. This then became a bill, introduced just before the summer - the English Devolution and Community Empowerment Bill - on 10th July 2025, introduced by Ang. This is basically giving mayors more power and responsibility, as you might expect. The second reading has already taken place (this week, Tuesday 2nd) and further stages are pending. Next up - two-tier councils (yes, really) have been asked to propose unitary authority structures by late 2025 - making things simpler and aligning with devolution. Removing bureaucratic layers, basically. What made some of the headlines, again, that we might be more familiar with? New mayors, with the best publicised being Andrea Jenkyns who was noisy this week with her “insomniac” rendition as she took to the stage at the Reform conference. The bits I caught looked very much like an Anglicised version of the RNC, the Republican National Conference, which I assume was pretty deliberate since the Reps have ultimately been successful in getting elected twice out of the past 3 elections, and it seems fair to say “the world has changed”, without getting too far into that and the implications. It seems (again from the outside) that there is widespread support for devolution, but that it is a massive task. I wonder whether Ang will still be being consulted as to her vision for it, or if instead she was simply taking the advice from the civil service on this one, and it will go ahead largely as it was planned. But the sharper eyes will surely see a problem here, and that problem is nothing to do with “Ang or no Ang”, but a completely different matter that I’ve accidentally on purpose referred to in that analysis. What is it? Well, when the King’s speech 2024 was released, with all these bills, the world looked different. Reform was polling in the teens - just where “Fruit and Nut” or “Jezbollah” if you prefer are currently polling. The annoyance that Farage had always been. They then dominated the council elections in 2025, in the largest council election shockwave for generations. Part of the issue with so much of the puffery that is used in the media is that when something genuinely significant happens, no-one actually recognises it as any different from the last headline - but make no mistake, the council election results in 2025 were truly seismic and the “Reform-quake” was most certainly a thing, in terms of the data and significance. The Great Leader (or whatever we might have to get used to calling him) referred this week to over 100 polls in a row that have had Reform at the top. So - you have Reform mayors, Reform-led councils (those local to me will know of the 19-year old leader of Warwickshire Council at this time, George Finch) and Reform at this time an absolute shoo-in for many more council seats in 2026 (and Wales, too). Are you seeing the conflict yet? There’s a huge technical and bureaucratic reason to devolve more power to the local authorities, but Reform are already in charge of some, and likely to be much more in charge of many before the next General election. So Labour effectively ends up handing more power to Reform in the spirit of “doing the right thing” as far as the civil service sees it. I’d suggest that might cool the devolution agenda significantly, because when all this was put together, the landscape was very different. Once we get to voting in the Commons, and the implications of what I’ve said here are put into party political language, do you see the bill getting dramatic support? Do you see it doing what it was set out and intended to do, even if it is the best thing for the country? I very much have my doubts. How about the insane 1.5m homes claim? Is this reshuffle, Ang departure inspired and inevitably brought forward, probably from next year, the time to drop this claim since it is impossible and we are very close to a construction recession as discussed above, with housebuilding printing sub-45 in the PMIs? Probably only one more relevant thing to consider then. Renters’ Rights. Is the bill going to change at all, given all this? Well, it is too late in the day, isn’t it. The next game of ping-pong is tomorrow, and Royal Assent is expected this month, with it coming into force in early 2026. I think Mr Reed will have to run with the football on that one. There’s not been anything to suggest he will feel strongly enough to change anything at this stage - it looks like continuity and implementation, the latter of which he has a pretty solid track record on if we are to believe what we are told (should we ever do that?). So I leave you with one thought as I bring this one to a close - and point you to this week’s image. Ang is down but not out, even though this might be the highest profile knock she’s ever taken. She’ll be back, in my view. Before I do close, don’t forget to book your SUPER EARLY BIRD tickets to the next Property Business Workshop that Rod and I are running on Wednesday 1st October in central London. This time around - investment metrics and how to run your property business at scale. My favourite topic of all! Book here: http://bit.ly/pbweight Above all - please remember to Keep Calm, ALWAYS listen to or read the Supplement, and Carry On; there will be opportunities abound this year and towards 2030 and beyond - the landscape has been set for a surefire bull run. It will be slow(ish), and take a little while longer to get off the ground - and the amount of stock around is still keeping things suppressed at the moment - but as yields currently continue to improve, it is a case of “here we go” in my opinion.

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