Confidence builds after Budget brings stability and hope for 2026

Hurrah!! Not only is Christmas just around the corner but, if sentiment is to be believed, so too is a busy early new year, and here at Living in London, we can’t wait to welcome it.

In our end-of-year review for 2024, we celebrated a market on the move after the first base rate cuts in four years as inflation fell back to target. Mortgage rates had also fallen. We anticipated a market powering into spring. We weren’t wrong. Thanks in part to buyers rushing to complete deals before the stamp duty changes, as well as growing confidence caused by those cuts, it was a buoyant first quarter.

And we are optimistic that early 2026 looks set to be similar.

Not without its challenges

Of course, 2025 hasn’t been without its challenges. Activity remained resilient for most of the year, with a decade-high number of homes available on the market. However, the rumour mill was in full throttle pre-budget and that impacted confidence massively in late Autumn.

Speculation about stamp duty or capital gains tax changes to properties of £500,000 and above had already led to an 8% fall in agreed sales for properties between £500,000 and £2 million in November, according to Rightmove. If the chancellor had targeted this price bracket, it would have had a big impact on the London market. Thankfully, the chancellor chose to focus on the very top of the market instead, targeting properties of £2 million plus.

The implications of this mean that some homeowners may consider downsizing, which could mean a boost in demand for lower-priced properties in the capital. There will also be relief among those who may have been delaying purchases until there was greater clarity about what taxes property owners will face in London. Further interest rate cuts will also help to further stimulate the market in 2026, with the next base rate decision due on 18 December. A further cut is expected.

Canada Water will continue to draw in buyers

Canada Water is likely to continue to prove a particular draw for buyers, especially as the Masterplan gathers pace after the completion of the first phase in the summer. This included the delivery of 300,000 sq ft of workspace and 13,000 sq ft of retail at Three Deal Porters and Dock Shed, as well as a new local leisure centre and 186 new luxury apartments at the 35-storey building The Founding. Such milestones increase overall demand for the area, positively impacting local property values as a result.

Certainty for landlords too

Lettings have also been challenging with uncertainty around the timing of the Renters’ Rights Act, firstly for its Royal Assent and secondly its implementation timeline. This had a significant impact on the market in SE16. We saw more landlords choosing to sell than usual, but this has created space and opportunity for new landlords or those wanting to expand portfolios, as well as first-time buyers.

Clarity came in November with confirmation that the biggest changes within the act – the end of section 21 no-fault evictions and the move to periodic tenancies – will come into force from May 1, 2026. Longer-term changes to property income tax are also challenges for landlords to deal with, particularly in the capital where rents are naturally higher.

The market isn’t easy, particularly for landlords, but as always we’re here to help. Service remains at the heart of our offering and has been recognised by our cabinet-bursting haul of awards once again. SME News named us the Best Property Investment & Lettings Agency 2025 in London, as well as bestowing us with the Residential Property Service Excellence Award 2025. Meanwhile, Global 100 and M&A Today have also both once again crowned us Best Real Estate Business of the Year 2026.

We must be doing something right, but as we prepare for the New Year, we’ll be considering how to offer even greater service in 2026, cognisant of your needs in an ever-changing market. Meanwhile, we wish you all a wonderful Christmas and a very happy new year!

Whether you’re looking to buy, sell, rent, or let in 2026, or simply need professional advice from a 5-star-rated, multi-award-winning agency, we’re ready to assist.

Contact us on 0207 231 0002, email us at welcome@living-london.net or get a free instant online valuation by clicking Here.