Bank of England flags softer housing market before rate vote

The Bank of England has reported further softening in the residential property market, with estate agents seeing weaker sentiment, transactions below last year’s levels and longer sales times ahead of Thursday’s interest-rate decision.

Its September summary, based on intelligence gathered during the six weeks to mid-August, says pressure on house prices is strongest in London and the South East while prices are “barely rising elsewhere”. In some areas, contacts told the Bank that transaction volumes were down by double-digit percentages on a year earlier.

Landlords planning a purchase, refinancing against a valuation or selling a rental home face a more cautious market at a sensitive point in the rate cycle. More choice for buyers can improve negotiating room, but a slower sale can also lengthen the period in which a landlord carries finance, maintenance and empty-property costs.

Bank agents report weaker housing activity

The Bank’s agents said property-market sentiment had continued to deteriorate as demand and supply faced a range of headwinds. Estate agents described activity as subdued, while the summary said sales were taking longer to complete. That makes the report a timely signal before the Monetary Policy Committee announces its September decision on Thursday.

This follows Landlord Knowledge’s report on July’s 4.9 percent fall in private new housebuilding, which pointed to a weaker supply pipeline. The Bank now adds evidence from businesses on the ground: private housebuilding remains particularly weak in London, and contacts say funding conditions have tightened.

For investors, the distinction between a softer sales market and a distressed market matters. The Bank did not report a broad price collapse. Instead, it recorded uneven conditions, with the capital and South East under more pressure and little price growth elsewhere. A landlord relying on a quick disposal should therefore test local achieved prices and realistic completion times rather than assume a national figure will translate to a particular street.

Construction and borrowing remain constraints

Construction activity was still weak, especially housebuilding, according to the summary. Contacts cited continued cost pressure, uncertainty and tighter funding as reasons for delayed projects. The Bank said there was little expectation of an imminent improvement, with further contraction possible.

The update is a useful counterpoint to Landlord Knowledge’s recent coverage of RICS rental expectations, which found tenant demand rising while landlord instructions fell. A softer owner-occupier sales market does not automatically ease the rental squeeze. It may, however, give well-funded landlords more time and choice when assessing a purchase, particularly where sellers have had a property listed for longer.

The Bank of England’s September Agents’ summary also said borrowing costs remained a constraint on investment and that firms in construction and property were among those least likely to be investing. It said banks were prepared to lend but that appetite was lower for construction and smaller firms.

What this means for landlords

If selling a rental: allow for a longer marketing and conveyancing period when budgeting for finance, insurance and void costs.
If buying: use the extra stock and weaker sales pipeline to compare recent achieved prices, not only the asking price.
Before refinancing: check that an updated valuation still supports the loan amount and rental-cover calculation required by the lender.
Watch for: Thursday’s Bank Rate decision and lender repricing, since the Bank’s report identifies borrowing costs as a continuing barrier to investment.
Bottom line: a softer market can improve buying terms, but it raises the cost of getting the timing wrong on an exit.

Editor’s view
The Bank’s agents are reporting a market that is slowing rather than breaking. That gives disciplined buyers room to negotiate, but it also removes the safety net of a fast sale for landlords whose numbers only work at last year’s valuation.

Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 15 September 2026

Sources: Bank of England September Agents’ summary
Related reading: ONS: private new housebuilding falls 4.9% in July