Last year was not a vintage one for housebuilding in the UK. The FTSE 350 Household Goods and Home Construction index underperformed the wider market by 20 percentage points, and housing completions may have undershot the government’s annual target of 300,000 by as much as a third.

But as the cost of debt drifts down and planning reform takes effect, investors should ask themselves whether housebuilders can regain ground in 2026.

The housing market may be rediscovering its mojo following months of pre-Budget uncertainty. There was a substantial uptick in near-term sales expectations in Royal Institute of Chartered Surveyors’ most recent survey, usually an accurate indicator of near-term activity. Property portal Rightmove also reported surging interest from both buyers and sellers in the weeks following Christmas.

Yet the mood in the industry remains sombre. “It’s still a very challenging environment,” said Steve Turner, executive director of the Home Builders Federation, an industry body. “The housing market is generally suppressed because of a lack of affordable mortgage lending, especially for first-time buyers.”

The industry’s call for sweeteners for first-time buyers will probably persist through the year.

Listed housebuilders’ recent trading statements help explain the call for subsidies. Leading the pack is Persimmon (PSN), which reported a 12 per cent increase in housing completions in 2025 to around 12,000, coupled with a 4 per cent increase in the average selling price to £278,000 – just below the national average.

Persimmon benefits from having more sites in the north of England, where both affordability and house price growth are stronger than in the south. The company aims to increase completions slightly in 2026 and has guided for pre-tax profit of £461mn-£487mn, an 11 per cent increase on 2025 at the midpoint.

“It’s not just a case of being weighted to the right region,” noted Anthony Codling, analyst at RBC Capital Markets, pointing to Persimmon’s approach to planning, its launch of financing packages via third parties, and its vertically integrated model as other advantages.

Taylor made?

The outlook is less positive for Taylor Wimpey (TW.), which recently warned that cost inflation in excess of price growth would result in falling operating margins in 2026. Market pessimism is shown in the company’s now sizeable dividend yield of 8.5 per cent.

“Demand continues to be muted – particularly among the first-time buyer category – which will constrain overall sector output,” said chief executive Jennie Daley.

The same applies to Vistry (VTY), which focuses on building affordable housing in partnership with housing associations. The company didn’t provide guidance for 2026 in its own trading statement, spooking the market; its performance may hinge on how quickly the government disburses the funding it has earmarked for affordable housing.

“There are still more questions than answers,” said Investec analyst Aynsley Lammin.

The remaining three large housebuilders are yet to update the market in 2026. Berkeley Group (BKG) is the “best run housebuilder”, according to Codling, but its properties, which are mostly in London and the south-east, have higher average selling prices, potentially rendering them ineligible from any potential government scheme for first-time buyers.

That leaves Bellway (BWY) and Barratt Redrow (BTRW), which are guiding for a 5 per cent and 9 per cent increase in completions for FY2026, respectively. The latter has recently lost its finance chief, and is reported to have started the search for chief executive David Thomas’s replacement, all while continuing to integrate the 2024 acquisition of Redrow, which made it the nation’s largest housebuilder.

Housebuilders call for more government help

Buyers are coming back after the Budget but the sector is building on shaky foundations. Hugh Moorhead reports

Last year was not a vintage one for housebuilding in the UK. The FTSE 350 Household Goods and Home Construction index underperformed the wider market by 20 percentage points, and housing completions may have undershot the government’s annual target of 300,000 by as much as a third.

But as the cost of debt drifts down and planning reform takes effect, the housing market may be rediscovering its mojo following months of pre-Budget uncertainty. There was a substantial uptick in near-term sales expectations in the Royal Institution of Chartered Surveyors’ most recent survey, usually an accurate indicator of activity. Property portal Rightmove (RMV) also reported surging interest from both buyers and sellers in the weeks following Christmas.

Yet the mood in the industry remains sombre. “It’s still a very challenging environment,” said Steve Turner, executive director of industry body the Home Builders Federation. “The housing market is generally suppressed because of a lack of affordable mortgage lending, especially for first-time buyers.”

The industry’s call for sweeteners for first-time buyers will probably persist throughout the year.

Listed housebuilders’ recent trading statements help explain the call for subsidies. Leading the pack is Persimmon (PSN), which reported a 12 per cent increase in housing completions in 2025 to around 12,000, coupled with a 4 per cent increase in the average selling price to £278,000, just below the national average.

Persimmon benefits from having more sites in the north of England, where both affordability and house price growth are stronger than in the south. The company aims to increase completions slightly in 2026 and has guided for profit before tax at £461mn-£487mn, an 11 per cent increase on 2025 at the midpoint.

“It’s not just a case of being weighted to the right region,” noted Anthony Codling, an analyst at RBC Capital Markets, pointing to Persimmon’s approach to planning, its launch of financing packages via third parties and its vertically integrated model as other advantages.

The outlook is less positive for Taylor Wimpey (TW.), which recently warned that cost inflation in excess of price growth would result in falling operating margins in 2026. Market pessimism is shown in the company’s now sizeable dividend yield of 8.5 per cent.

“Demand continues to be muted – particularly among the first-time buyer category – which will constrain overall sector output,” said chief executive Jennie Daley.

The same applies to Vistry (VTY), which focuses on building affordable housing in partnership with housing associations. The company didn’t provide guidance for 2026 in its own trading statement, spooking the market; its performance may hinge on how quickly the government disburses the funding it has earmarked for affordable housing.

“There are still more questions than answers,” said Investec analyst Aynsley Lammin.

The remaining three large housebuilders are yet to update the market in 2026. Berkeley Group (BKG) is the “best run housebuilder”, according to Codling, but its properties, which are mostly in London and the south-east, have higher average selling prices, potentially rendering them ineligible for any potential government first-time buyer scheme.

Still to report are Bellway (BWY) and Barratt Redrow (BTRW), although they have already guided for a 5 per cent and 9 per cent increase in completions, respectively, for FY2026.

Shock change at the top for Workspace

Flexible office landlord Workspace Group (WKP) is set to replace Lawrence Hutchings as chief executive in a surprise move, with industry veteran Charlie Green assuming the role on 2 February. Hutchings was in the job for less than two years, joining the company in November 2024.

Workspace did not give a reason for the change.

Green co-founded flexible office provider The Office Group (now Fora). He led the company for two decades and oversaw its majority acquisition by Blackstone in 2017, before stepping down in 2023.

“The strategy in place is clear and provides the right platform to rebuild occupancy and drive income growth over time,” said Green. This support could suggest he does not intend to significantly alter the company’s strategy.

Activist investor Saba Capital, which owns a 13.5 per cent stake in Workspace, has pushed for change. It wrote to Workspace’s board last week to propose a managed wind-down of the company’s £2.3bn portfolio over a 12 month period, although there is no clear link between this and Hutchings’ departure.

Workspace, which trades at a 45 per cent discount to its net tangible assets (net asset value less intangible assets), is at an intriguing point in its mooted revival, with investors left to ponder the reasons for Hutchings’ departure.

“Investors may be left to conclude that either the board isn’t happy with what Hutchings has done, or [he wasn’t] happy once he’s had a chance to see the business up close,” said Panmure Liberum analyst Tim Leckie.

“Either way, it is another question for investors that are already facing challenges in Workspace’s growth outlook, in a company with an adversarial shareholder with [a] demonstrable lack of understanding of Reits and the London office market,” he noted, in reference to Saba. HM

Private investors to get better access to IPOs and corporate bonds

Rules that came into place at the beginning of this week should offer private investors more opportunities to directly access share placings, initial public offerings (IPOs) and corporate bonds.

The changes reduce the costs and administrative burden for companies wanting to involve private investors when they raise money on capital markets.

For example, under the old system, companies were limited in how much they could raise in a share placing that included retail investors without publishing a prospectus, which is costly to produce.

Listed companies will now only need to produce a prospectus when issuing shares exceeding 75 per cent of existing share capital, up from 20 per cent.

IPOs involving retail investors will now have to stay open for a minimum of three days, down from six. The wait was off-putting for companies, which often preferred to exclude private investors altogether instead.

“For years, retail investors could not access most IPO offers and had to wait until the first day of dealings to buy the shares,” said Dan Coatsworth, head of markets at AJ Bell. “[This] was partially down to companies often finding it easier and quicker to restrict access to [only] professional investors during the flotation.”

Finally, companies will no longer need to publish an additional prospectus to issue so-called low-denomination bonds (below €100,000, or £87,000).

The requirement meant that companies typically focused on larger bonds for institutional investors. Making low-denomination bonds easier to issue should grant small investors access to this area of the market.

Neil Shah, market strategist at Edison, said the new rules marked “an important step in restoring retail access to public bond markets”.

“Retail participation in UK public bond markets has declined materially over the past decade, with issuance of bonds below £1,000 becoming increasingly uncommon,” he noted.

He added that the move also helps companies, as it “reduces regulatory and documentation costs for companies, making public debt markets more accessible, particularly for mid-sized issuers . . . Over time, bringing retail investors back into public fixed income markets strengthens depth, resilience and funding diversity.”

A group of platforms including AJ Bell and Hargreaves Lansdown, as well as interactive investor and RetailBook, said retail investors should have access to all UK IPOs, follow-on raises and “plain vanilla” listed bonds. These are bonds that are not convertible and are unsecured. The London Stock Exchange will highlight these as “access bonds” to investors.

“Until now, gilts were the primary low-denomination option,” said Shrey Kohli, the exchange’s group director for primary markets. “With access bonds, corporate bonds join the mix, opening opportunities across the credit spectrum.” VC

Zurich reveals Beazley takeover offers

Beazley (BEZ) shares hit their highest ever level this week after Zurich Insurance (CH:ZURN) made its interest in the FTSE 100 insurer public.

This year, the Beazley board has received two all-cash takeover offers from the Swiss insurer. The first, at 1,230p per share, came in early January, and Zurich raised its offer to 1,280p on Monday, valuing Beazley at £7.7bn. This is a 50 per cent premium to Beazley’s closing share price on 16 January. Zurich also made three offers last year, although the prices have not been made public.

Beazley’s shares climbed 40 per cent on the news to 1,170p.

Zurich said it had reiterated “its desire to proceed at pace” and added that the new offer “is designed to facilitate prompt engagement”. 

Beazley said this week the board rejected the first offer “unanimously . . . on the basis that it significantly undervalued the company”. It has not yet responded to the 1,280p-per-share bid.

Analysts at RBC Capital Markets argued the newer proposal was a “reasonable offer, given the uncertain outlook for Beazley’s earnings in coming years as Lloyd’s [of London] and US market end-markets soften”. Zurich is also setting up a Lloyd’s syndicate alongside the Beazley interest.

The bidding sent shares in Hiscox (HSX) and Lancashire (LRE) up 7 per cent and 4 per cent, respectively, this week. CA

“We don’t want the banks any longer to be on the naughty step,” City minister Lucy Rigby told reporters in December, after the Bank of England announced that it had lowered its requirements for the amount of capital that banks must hold to absorb economic shocks.

On the contrary, criticism from the Oxford academic behind the UK’s post-financial crisis regulation, Sir John Vickers, suggests the central bank could be due some time on the naughty step itself.

In an article published by the Centre of Economic Policy and Research think-tank earlier this month week, Vickers and ex-central banker David Aikman accused the Financial Policy Committee (FPC), which is the arm of the Bank of England responsible for managing risk, of making a “mistake” and bowing to “political and lobbying pressure”.

By unlocking surplus capital, they said that instead of stimulating more lending to boost the economy, the regulator has in fact opened the door for “higher payouts to bank shareholders”.

The FPC said that the capital requirement across the sector can be reduced by £60bn, to reflect the fact that ‘risk weightings’ – which is the scale used to quantify how risky different types of loans are – have gone down. As such, the FPC cut the capital buffer required for banks by 1 percentage point, to 13 per cent.

Aikman had previously noted that lower risk weightings could simply be a product of “gaming via internal models” rather than genuinely less risky business going through the banking system.

The two asserted that since the last major review in 2015, economic and financial risk has “clearly increased”, and if anything warrants an even higher capital threshold.

When asked whether the change was likely to prompt greater payouts, Bank of England governor Andrew Bailey told the Financial Times that “there is a two-way relationship – if banks support the economy by lending, that will strengthen the economy and the banks will benefit from that”.

In any case, all of this remains broadly good news for sentiment around the UK’s ‘big four’ banks. HSBC (HSBA), Barclays (BARC), Lloyds (LLOY) and Natwest (NWG) have each seen their shares trade higher since the December announcement, as the market has bought into the idea that lower capital requirements will have a positive impact on the cost of funding.

And while this should theoretically provide UK players with the agility needed to compete with their newly deregulated Wall Street rivals on loan pricing, the ultimate impact of the reform need not be reduced to such binary outcomes as either stimulating more lending or higher shareholder returns.

Instead, the case for a positive feedback loop emerges, in which a bank’s ability to land more business on its books should naturally translate into the kind of profitability that merits bigger payouts over time.

The catch? The success of this model lives or dies by the risk weighting of said new business. And given the hodgepodge of proprietary risk modelling methods used at each bank, sometimes even varying between different business units despite operating in the same jurisdiction, it is the level of risk itself that remains the great, and worrying, unknown.

The FPC’s decision is open to feedback until 2 April, but given the supportive policy backdrop, this latest criticism is unlikely to prompt a volte-face from the regulator.

Not least because to do so would be to turn against the deregulatory zeitgeist that has firmly taken hold, perhaps landing the central bank on an even bigger naughty step: the government’s.