Blain’s Morning Porridge Sept 30^th 2025: The UK Housing Crisis – Plenty of Finance, Why the Problem?

“Home is where hope and dreams come together.”

Reform has persuaded UK citizens their dismal lives are due to immigrants, but the truth is far more prosaic. The quality of life in the UK’s big cities is tumbling due to chronic under-investment over decades, while the plight of young workers in finding accommodation security to build careers and families is the real policy failure.

Please check out the Morning Porridge website, you will now find I’m posting daily You-Tube comments. I am keeping them short and focused. Do me a favour and give them a look and a like! Market commentary is a competitive space, so I’ve got to grow the readership and subscriber base!

Sorry for the lack of comment Monday morning, but I’d gone to catch the very early train to London, which was cancelled, meaning the later train was rammed with people and I couldn’t get a seat with a table to write yesterday’s Porridge. Annoying and rather confirmed my love/hate comment from the 200^th Birthday of Railways from last week…

Back in the markets…  

There is plenty to worry about – but I’m wondering how significant it will all play out in terms of markets. A few months ago we’d be shocked by the shenanigans in Washington. Today, we are barely surprised and hardly blink – markets are blithely ignoring the background noise because it doesn’t seem to matter:

• Trump has delivered an ultimatum to Hamas (not a peace deal) to surrender, or he’ll give Isreal a free reign in Gaza. Yawn…
• A govt shutdown in Washington looks inevitable. Trump and JD Vance are inevitably blaming the Democrats. Yet, hitting the debt ceiling plays into Project 2025 plans to slash the government. Yada, yada, yada…
• Markets love everything. The froth around lower rates, tariffs cutting the deficit, and rising incomes runs the market. But note.. US bond yields remain stubbornly stuck about pre-ease levels. Whateva…
• No one seems to be connecting rising electric prices, data centre buildouts, Trump giving subsidies to coal, and OpenAI revealing plans to become an AI retailer as the next stage of the tech bubble. How terribly, terribly interesting… not.

I recently learnt to my cost: when the underlying hum of the engine starts to sound a little different – it’s may be concealing imminent and cascading failure.. In my case it was a written off Range Rover engine. The global economy blowing up as a consequence of Trump over-reach would be… careless?

Plenty to write about for the rest of this week!

Meanwhile, back in the real world…

What defines the success of a nation? What makes a nation great? Is it:

• Its military power and conquests?
• Its GDP per Capita, the number of billionaires, the success of entrepreneurs innovating technologies and creating wealth?
• Its economic might? The strength of its economy, trade, currency, stock and bond markets?
• Its physical and systemic infrastructure?
• Its leaders and government?
• Its degree of soft-power; garnered from history, culture and presence?
• Its people?
• Or is it – its cities?

It’s a mix of all these points, but the final point about the importance of Cities comes from a panel discussion on the resilience of European housing markets at the Deal Catalyst UK Mortgage Finance conference in London yesterday. It was brilliantly expressed by my new chum, Luca Bertalot, Secretary General of the European Mortgage Federation. We were on the panel together. Our conclusion is strong cities matter. They create economic heft in the form of jobs, opportunities and wealth, and accelerate the nation behind them. And strong cities boil down to homes.

The idea that Cities and People are indicators of economic greatness may sound curious. Some of the most chaotic cities on earth are the most vibrant. If attitude and beauty were measures, then Paris or Edinburgh might win. If it was history and art, then perhaps Rome and Milan, would qualify Italy as the unlikely but most successful nation on Earth. If I wasn’t Scottish, my second choice would be French… but let’s face it… neither is top. American cities, even New York, are too parochial to count. Chinese cities are too mono-genetic.

Despite the Sharia Courts that exist only in President Trump’s mind, London is probably still the greatest city. It is not beautiful. It doesn’t work very well. It’s infrastructure is pants. Some say there is more culture in a pot of yoghurt. Its democracy appears in crisis. Yet it is the most cosmopolitan city on Earth.

The extraordinariness of the English peoples has ever been their humour, and the absorption of successive waves of immigration. No matter the colour of a third-generation child’s skin, they will likely be as English as the archers at Agincourt! There is a rising risk that tradition may change as a result of the understandable backlash against the failures of immigration policy in stopping the small boats, but especially in assimilation, these past 15 years.

However, the greatest threat to the UK’s resilience is not immigration, but inequality and the unaffordability of accommodation in its cities.

Most Londoners are strivers, good people trying hard for success. Its the same everywhere. Everyone wants to build careers, support their football teams, meet their partners, start their families, send their kids to good schools and give them the best chances in life, and to enjoy the magnificence of living their best lives. Londoners are blest because they are doing it in the best city on Earth.

But what is the reality? As I’ve written before, a lack of “accommodation security” is killing the London dream. Today most young London workers will never get on the housing ladder – unless they are blessed with rich and generous parents- they don’t have access to large deposits required, or pass the regulatory sanctioned affordability tests of banks to get a mortgage. Instead, they find their lives blighted by chronic accommodation insecurity, forced to chase increasingly dismal rental accommodation at grossly inflated rising costs.

One of the key messages pressed by the hard right is the lack of availability is due to immigrants taking all the available homes. That in politics. Not Truth. The crisis in accommodation has been nearly 50 years in the making – the consequences of polices that have created unaffordable private ownership, right-to-buy policies, and not replenishing the social housing stock.

Last year, at the same conference, I warned; The UK’s Government needs to get radical on housing policy – or fail. (That link will take you to an article). Since then the Labour Govt has coined the phrase Build Baby Build (good grief – who do we have shot?). Although home building is rising, the number of new homes continues to fall well short of what is needed to meet their pledge of 1.5 million new homes this parliament.

What’s the solution? It’s critical to make housing affordable to more people, but to do so without crashing the UK’s housing market. That means finding new ways of financing young people onto the housing ladder through concepts such as lifetime mortgages, and making renting an acceptable and even desirable alternative. To make cities effective and attractive, cradle to grave access to state rental properties would pay massive dividends.

As yesterday’s conference showed, there is no shortage of private capital available to finance the building of homes. That can be done through RMBS, Covered Bonds, and hybrid capital. I suspect the real issue is bureaucratic – the delays in planning, and the regulatory burden imposed on mortgage lenders. To make they system work, it needs a radical rethink.

At a time when the current government is struggling with an impossible budget in November (as a host of long-term problems come due – with their roots in the chronic underperformance of UK productivity and growth since Brexit), it’s time for more radical housing solutions.

There is so much more to be written about housing finance, but so little time to do so..

Out of time and back to the day job…

Bill Blain

CEO – Windshift Capital

Author – The Morning Porridge

Partner – Shard Capital