Resilience, professionalisation and reform: what may still come in the 2026 property market – Norkett

Real estate – professionalisation at the forefront

For professional landlords, 2025 was the year of agility and diversification.

While rising costs, a lack of quality supply, and profitability concerns forced some small-scale landlords to sell up, this further drove the professionalisation of the market and prompted many professional landlords to diversify from traditional single rentals – a trend that has carried through into the first quarter of this year.

Instead, many shifted to other property types that offer higher yields and allow professionals to build stronger cash flows.

This resulted in a greater proportion of activity relating to houses in multiple occupation (HMOs) and commercial property than in previous years. Overall market activity has remained mixed.

Semi-commercial property remains present within this activity, with food-related premises, including cafés, restaurants and takeaways, among the more frequently represented types. This reflects the composition of activity rather than a concentration in any single asset class.

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Professional landlords will also need to be aware of Making Tax Digital (MTD). Introduced this month, landlords with an income over £50,000 must use government-approved software for quarterly tax reporting, marking a major shift in how rental businesses are managed.

We’ll likely see further professionalisation of the market, as professional landlords remain agile and resilient, while more small-scale landlords exit.

Retail mortgages – modest growth and market stabilisation

Following a sustained, turbulent period, the mortgage market finally began to stabilise in 2025, as inflation started to ease and interest rates were cut late in the year.

While mortgage rates were projected to creep down in the wake of interest rate cuts, recent geopolitical events have thrown a spanner in the works, and as a result, projected lending for house purchases looks set to be modest in 2026 as affordability challenges take hold.

However, this is likely to be somewhat offset by remortgaging, resulting from a large wave of fixed rate mortgages coming to an end.

Though mortgage rates should be relatively competitive throughout the year, concerns remain for first-time buyers. Following the removal of stamp duty exemption, there are currently no new incentives or support initiatives in place – and no changes seemingly on the horizon.

This continues to divert demand towards the rental market, and the ambitious target of one-and-a-half million new houses built will play a significant role in alleviating rental pressure and shaping the market in the year ahead.

Development finance – looking to scale up

Developers will be hoping that this is the year of growth, as confidence returns and the market presents increased opportunities.

While uncertainty and a lack of progress plagued growth efforts in 2025, especially with planning reforms, developers remained agile and resilient and are expected to turn their attention to scaling up.

The removal of planning red tape and the government’s previous pledge to greatly increase the number of planners have so far failed to come to fruition. However, the Autumn Statement at the back end of last year renewed focus on planning reform, with further commitments aimed at accelerating development.

This target has forced the government to ease planning restrictions in some cases, which has made local authorities more permissive, and a focus on brownfield and grey-belt land should provide additional opportunities for developers.

Revised National Planning Policy Framework reforms – should they come into play – would also go some way to streamlining the planning process and removing frustrating obstacles often faced by developers.

Ultimately, the view for developers this year is somewhat positive. According to Shawbrook’s data, 48% of developers are optimistic about the economic outlook and a further 36% believe it will get better.

As a result, 74% have the confidence to invest in their business this year, and 69% expect government plans to contribute to growth. As well as investment, strategic partnerships look set to be a key theme over the next 12 months – something 89% of developers have either done or are in the process of exploring.

What comes next?

The residential market is shifting towards a buyer’s market, while the buy-to-let (BTL) market becomes further professionalised.

Retail mortgages should become more competitive, and as rates come down, buyers should be provided with some much-needed breathing space when it comes to affordability and competition.

For developers, the year will be defined by planning reforms, increased activity in sectors such as build to rent, and a shift towards more sustainable, energy-efficient properties.

All in all, the outlook for the year is a focus on resilience, opportunity and modest growth.