Trump takes aim at institutional investors in housing

"People live in homes, not corporations," US President Donald Trump said in a Truth Social post yesterday as he announced plans to ban large institutional investors from buying more single-family homes.

The financialisation of housing is a difficult topic globally for politicians struggling to tackle affordability crises. Solutions often range from introducing longer mortgage terms – the President last year raised the idea of 50-year mortgages – incentivising buyers via government support schemes or loosening planning restrictions. These can help buyers get a foot on the ladder, and buyer support schemes do increase supply, but it's a slow process. Moves in mortgage rates tend to have an outsized influence, and that's largely out of the hands of fiscal policymakers.

Frustrated politicians then turn their ire on landlords. In the UK, repeated changes to policy and taxation in the private rented sector have prompted many landlords to sell, which has helped fuel record rental growth with no discernible impact on affordability in the sales market. As the pressure rises, so does the risk that policymakers introduce rash measures that have unintended consequences.

Key differences

Blackstone points out via the FT that it owns 0.06% of the 106mn single-family homes in the US, while institutional investors overall own only 0.5%, so any clampdown will have no impact on affordability.

Thankfully in the UK, the policy landscape is broadly supportive of institutional investment in housing. That's in part due to some key differences; where in the US investors have purchased foreclosed homes, and at times are viewed as competition for homebuyers in the second-hand market, the UK's nascent single-family rental market is more closely tied to new delivery. Bulk sales to single-family operators have been crucial in enabling housebuilders to recycle capital into new projects during a period of weaker demand, for example. Leaders in the sector are also doing a good job of communicating the benefits via the BPF/Association for Rental Living taskforce chaired by the MP Clive Betts.

“At a time when there is a chronic housing undersupply globally, institutional investment in professionally managed rental housing increases total housing output, broadens consumer choice, and helps stabilise delivery through market cycles," said Knight Frank's James Mannix. "Restricting that capital would risk reducing supply rather than protecting it. The policy challenge is not institutional ownership, but how to accelerate delivery. In that respect, long-term capital aligned with new development is a huge part of the solution.”

Fragile confidence

UK construction activity contracted sharply again in December, according to a new PMI reading. The headline index registered 40.1, up from 39.4 in November but below the neutral 50.0 value for the twelfth successive month. The latest reading was the second-lowest since May 2020. Both housing and civil construction registered their worst readings since the height of the pandemic.

"Anecdotal evidence suggested that fragile confidence among clients and subdued underlying demand had resulted in lower workloads at the end of the year," the release said. "Many firms also noted that delayed investment decisions ahead of the Budget in November had weighed on their sales pipelines."

If we're generous, bright spots are emerging. Job shedding is easing. Plus, despite sluggish demand conditions and a lack of new orders to replace completed projects, the latest survey pointed to a recovery in business optimism at construction companies. Around 37% of the survey panel predict a rise in output levels during the year ahead, compared to 20% that forecast a decline. That's the highest level of business confidence for five months. A number of firms cited forthcoming new work in the utilities sector, related to investments in water and energy infrastructure. Lower interest rates and an improvement in domestic economic conditions were also reported as factors that could help to boost construction activity over the course of 2026.

Tax speculation

House prices dipped by -0.6% in December, following a -0.1% fall in November, according to Halifax data published yesterday. The figures reinforce similar numbers from Nationwide and the Bank of England covered in Wednesday's note.

“House price growth effectively evaporated last year as supply built and demand was undermined during months of tax speculation before the Budget," Knight Frank's Tom Bill told reporters. "Now there is more clarity and mortgage rates continue to head lower, we expect stability rather than the feelgood factor in the early months of 2026. Despite the growing risk of domestic political uncertainty, we believe house price growth should climb to 3% by the end of the year.”

In England, the North East had the highest annual growth rate; average property prices rose 3.5% to £181,798. That was followed by the North West, which saw growth of +2.8%, to £245,323. Property prices in London fell 1.3% during 2025 to £539,086.

In other news...

Antigua vs Barbados — glow-ups for the islands vying for international homebuyers (FT) – for more, read Knight Frank research on The Bahamas, Barbados and St Barts – ‘Not in my name’: Labour’s new towns battle (FT), and finally, Higher Taxes on the Rich Could Backfire for UK Chancellor Reeves (Bloomberg).