"While the financial sector can’t control the economic weather, it can respond to the uncertainty by building flexibility into products"
- Henry Vaughan - Selina Finance
As we reach the end of 2025, many property professionals and investors will be strategising for the year ahead. Weeks of budget uncertainty and new taxes haven’t made this easy and many will be rethinking their plans.
If the last few months have taught the property sector anything, it’s that uncertainty is currently a certainty. Whether it's speculation around the mansion tax, growing landlord taxes and tourist taxes on the horizon, property investors of all stripes will need to be flexible if they’re to continue thriving in 2026.
(In)flexible finance?
Amongst many of the property investors I speak to, there is a reluctance to invest at the moment. This is driven by a sense that locking into financial products with fixed terms and interest rates when faced with an uncertain macroeconomic and fiscal environment feels too risky.
Research from We Buy Any Home indicated that as many as one in five home-movers put plans on hold as they waited for measures within the budget to become clear. At the other end of the market, Investec has also warned that the UK’s property market has become less appealing as an investment in recent months.
The budget is now behind us, which will bring some clarity to property investors and should hopefully lead to some movement in the market. That said, the outlook for the UK economy remains uncertain, and the next move by the Bank of England on the base rate is anyone’s guess.
So, it’s not hard to see why, against this backdrop, investors are cautious about committing to long-term and fixed-rate financial products when funding investments. So, how can financial services businesses respond to this uncertainty and inspire the confidence needed to continue investing in UK property?
An equitable solution
While the financial sector can’t control the economic weather, it can respond to the uncertainty by building flexibility into products. Great flexibility in UK financial services has the potential to help investors manage risks ranging from inflationary spikes to new property and yield taxes. So, what does this look like in practice?
One example of this is home-equity-line-of-credit (HELOC) finance. HELOC has grown to be a substantial market in the US, worth around $422 billion. Thousands of Americans use this credit, secured against existing home equity, to draw down funds as and when they need them and only pay interest on what’s drawn down.
It’s for this reason that HELOC has become a crucial product when it comes to property development and investment in the US. A flexible line of credit allows developers to pay contractors as and when needed - rather than have a lump sum sat in an account incurring interest payments. It also makes it easier for investors to enter deals as cash buyers, bid at auction and sell properties and repay loans without early repayment charges.
Until now, however, this product has been unavailable in the UK and financial services on this side of the pond have traditionally been rather more conservative. This is now changing, however. Driven by the uncertainty that exists in the economy and the need for flexibility in finances as a way of cushioning some of this uncertainty, HELOC and other equity release products are gaining in popularity in the UK.
Looking ahead
Despite a challenging market, it remains the case that, for everyone from small-scale buy-to-let or holiday let investors, through to large institutional investors, the UK property market remains an attractive proposition capable of generating good returns.
Recent years, however, have challenged margins with energy price inflation, tax, legal and regulatory changes and fluctuating demand all having an impact. As this uncertainty continues to weigh on investors, the opportunity for financial services in the UK is to innovate and deliver products that help investors manage this uncertainty.
The ongoing growth of HELOC and other products is indicative of the demand here and of the resilience that exists in the UK’s property market.
*A HELOC is a second-charge mortgage (also known as a secured loan). Consider how it might affect your ability to secure additional borrowing in the future. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
