The latest figures from the Home Builders Federation make somewhat uncomfortable reading, particularly if you’re a Government which has placed a significant ‘bet’ on being able to build 1.5m houses by the end of this Parliament.
Planning permission was granted for just 42,000 new homes in England in the third quarter of 2025. That is a fall of more than 30% on the same period in 2024 and the lowest quarterly total for well over a decade. Annual approvals are also weak, with just under 210,000 homes approved in the year to September 2025.
These numbers matter because they reinforce a long-running issue. Demand for housing continues to grow, but supply still appears unable to keep pace, and that’s before you even factor in the deficit in housing supply that has been running for the best part of 20-30 years.
This has clear consequences across the whole housing market, not just for housebuilders. It shapes behaviour in owner occupation and in the private rental sector (PRS), which should clearly be reviewed in tandem rather than isolation.
FIRST-TIME BUYERS ARE ACTIVE, BUT STILL STRETCHED
Over the last 12 to 24 months we have seen a steady rise in first-time buyer activity. Falling interest rates have helped. Affordability has eased. Lenders have also sharpened their focus on this group, with higher income multiples, longer terms and more targeted product ranges.
However, increased activity does not mean the problem is solved. The FCA’s latest Feedback Statement and mortgage roadmap makes this clear. First-time buyers are still highlighted as a group that needs greater levels of support to get onto the housing ladder, and work will be taking place through this year to review how that should look.
In simple terms, more people want to buy, but not everyone who wants to can do so. That gap between demand and supply does not disappear. It flows directly into the PRS.
WHEN SUPPLY FALLS SHORT, THE PRS ABSORBS DEMAND
The house building figures show that supply does not demand, and has not done so for many years. Even with improving mortgage affordability, there are not enough homes coming through the pipeline. As a result, many households stay in rented accommodation for longer than planned.
This helps explain why tenant demand has remained strong. The PRS continues to provide flexibility and essential capacity within the wider system. It acts as a pressure valve when owner occupation cannot expand quickly enough.
As mentioned, this is not a temporary effect. With planning approvals at such low levels, supply constraints are likely to persist. That reinforces the importance of a stable and well-funded PRS.
WHY THIS SUPPORTS LANDLORD CONFIDENCE
Against this backdrop, it is notable that IMLA is forecasting an increase in purchase lending within buy-to-let both this year and next. This reflects confidence that demand fundamentals remain sound. It also reflects the changing profile of landlords.
Those with established and growing portfolios are often better placed to act. Many have equity that can be used to fund deposits for further purchases. In a market where stock is tight, that ability to move quickly matters.
Plus, as our own Rental Barometer figures continue to reveal, first-time landlords continue to make up at least one in 10 of all our mortgage applications – property remains an investment many think is still worth pursuing.
The outlook for 2026 also looks more supportive than in recent years. Rates have fallen from their peaks. Lenders are competing again. Product choice has widened. Larger loan sizes and more flexible criteria are becoming more common, particularly for limited company borrowers and portfolio landlords.
For professional landlords with strong portfolios and a long-term view, this combination is significant. Strong tenant demand, easing funding costs and competitive lending terms improve the investment case, even in an environment where the Renters’ Rights Act brings with it more responsibilities and cost.
A JOINED-UP VIEW OF THE MARKET IS ESSENTIAL
The key point from the latest data is that the housing market cannot be viewed in silos. Owner-occupation and the PRS are intertwined. Progress in one area does not remove pressure from the other.
Rising first-time buyer numbers are welcome, but they do not eliminate the need for a healthy PRS. Equally, weak house building affects everyone, from aspiring homeowners to tenants, from landlords to advisers and lenders.
For advisers, landlords and policymakers alike, the lesson is clear. A balanced housing market needs choice, supply and access to finance across tenures. Until housing supply improves in a meaningful way – and even when it does – the PRS will remain central to meeting demand.
That is why, despite the challenges of recent years, well-positioned landlords enter 2026 from a position of strength, and therefore as advisers and lenders we should certainly look to match their ambitions and needs in this sector.
