We sat down with Tom Ellis, founder of Ai Law, a full service commercial law firm, to discuss his experiences of the UK property market right now and where he sees it going into 2027. We discuss the fear and liquidity issues that exist in the market, and why despite this their instructions keep rolling in.
Ai Law is a full service commercial law firm based in Liverpool although acting nationally. What have your experiences over the past year or so told you about the current UK property market?
A law firm is often well-placed in the market to take its temperature because it acts for a range of clients from all walks of life. Our property team act for lenders and borrowers, developers and first-time buyers, and landlords and agents, so acting on transactions from the inside lets us see what is happening and see first hand how people are feeling. Our firm is very relationship-based so we must be responsive to how people are feeling and what they’re actually experiencing, not just what the headline figures say.
So from that vantage point, what’s your verdict on conditions right now?
It’s a tough market, and I think that’s not just UK property, it’s business in general. There hasn’t been a big market crash like say in 2008, but things have definitely slowed and just feel harder. Things are taking longer, properties are being valued more conservatively, deals that previously took six weeks now take a few months, and our instructions on contentious matters like debt recovery and insolvency have increased.
You’ve said the market feels different to previous downturns. In what way?
Everything feels quite artificial. I don’t think anybody can actually point to one particular issue or event that concerns them most. It’s a mix of several things that are all trickling down: the government and changes to property legislation which increases regulation and red tape, planning permissions taking longer and development costs rising to satisfy the new regulation, proposed tax hikes, cost of living increasing and London property stalling. Then there are the geopolitical concerns in the Middle East, which had a direct impact on the London property market this year as people sought safety over Dubai, although that now seems to have waned. All of these things eventually catch up and impact the market on the ground, and I think that is what we are feeling right now in the property market. Not to mention the media like the Daily Mail publish articles regularly which seem to be negative and scaremongering for private landlords by highlighting the government’s plans to increase property tax and regulation further — these things aren’t helpful to individual buyers and sellers.
Yet at the same time, if you look at the stock market it’s posting all-time highs. My view is thats largely related to the cost of living and inflation going up resulting in higher reported figures – that and big expectations over AI – rather than a sign of any particular investor confidence in the market, but the fact that we have this general sense of fear and then the stock market that keeps rising is kind of eery and another factor that makes people apprehensive, particularly in the property market. It’s as if everybody is waiting for something to happen.
Let’s talk about liquidity. What are you seeing from the lender side?
Lending is still happening and our lending instructions are busy. From our experience, whilst properties are being down valued, there is a heck of a lot of cash out there and lenders are keen to deploy it. But then the market itself is sluggish. So you have funding available but transactions that aren’t moving at pace. That’s an unusual combination and can be frustrating.
How much slower are transactions actually running?
Materially slower. Deals that at one time took six weeks now take four months. Properties are on the market for longer and finding a buyer appears to be tougher.
But then we are at the end of a very hot summer in Britain and Europe and that may well have had an impact — things slow down, people take breaks and extended holidays. Which is nice, and no bad thing. But the trajectory of the property market slowing down predated the nice weather.
On the flip side, I think the challenge in selling has resulted in more properties being sold at auction, which move at pace, so we have more auction purchase instructions coming in.
If properties are sitting longer and selling for less, is that not an opportunity?
For investors with the right profile, I’m sure it is. We are experiencing a number of clients that see it as exactly that. Longer marketing periods mean prices come down, and when you combine the lower purchase prices with the availability of mortgage finance, that is a real opportunity — we have several clients that are following this strategy at the moment and buying at volume. It reminds me of the old adage, buy when there is blood on the streets.
You mentioned fear. Where do you think it’s coming from?
I think at this point it’s more apprehension rather than fear. Our clients have told us of their business challenges for some time now, so the fear of a downturn has almost subsided and people are sort of just getting on with it — fear is of the unknown and most of our clients have actively experienced the challenges already. That is for our business clients. For individual clients, particularly buy-to-let landlords, who may not have the same insight that business clients have, I’d say the uneasy feeling is coming from the press reporting on government changes to tax and regulation, like the intended EPC requirements coming in or the Renters rights reform and abolishing section 21 notices to evict tenants. There are constantly articles about the rising cost of living, about landlord regulation and tax rises on the horizon, that seem engineered to create more fear.
How has your experience differed between your business clients and your individual clients, such as private landlords?
Both are apprehensive, but our experience is that commercial landlords and developers are starting to view it as more of an opportunity, whereas for individuals they are more cautious and perhaps concerned.
It seems a little ironic that the changes to legislation that the press report on are supposed to help individuals, and yet the effect is that private landlords are the ones that are looking to sell and feel the uncertainty. For the most part landlords are individuals that have saved up to purchase a property for retirement, and are not necessarily commercially minded — it’s resulting in an opportunity for businesses to buy those properties and refinance, meaning more rental properties on the market.
And what’s happening in the rental market?
As property prices come down, rent is the same or even increasing, which explains why a number of our investor clients are buying properties at volume right now.
You’re optimistic about the autumn. Why?
I’m looking forward to September. It’s been a long hot summer and I hope people will be back to a business mentality soon and deals start to speed up and get back on track. If something geopolitical kicks off around November, that will keep things subdued — not a prediction, but something that people will remain apprehensive over for a long time to come I’m sure.
So how would you sum up your position?
It’s probably fair to say the property market feels the effects of the wider climate more than most sectors, but it is also the single biggest investment of most people’s lives and that is never going to change. Whatever else happens, people need somewhere to live, and so they will keep buying, selling, letting and borrowing.
So yes, we’re noticing real apprehension out there — a lot of it from the constant reporting on government changes to legislation. The fact our lender clients are keen to lend is a good sign and each of our clients have different reasons for buying and selling.
Our clients are certainly feeling the challenges of the current market climate in UK property, although what we’ve come to find is that no matter how challenging, it carries on. It may change but it doesn’t stop. Our instructions are continuing to roll in despite the uncertainty and certain areas have even become busier.
Tom Ellis is Director Solicitor at Ai Law. The firm advises lenders, developers, agents, landlords and private clients across property, commercial, dispute resolution and private client work.
The views expressed are Tom’s own commentary on market conditions and do not constitute legal or investment advice.