The firm has surveyed 50 global institutional investors in the UK living sector that represent £300bn of AUM, gauging their opinions on how appetising these assets are.

Three quarters of respondents (76%) said political uncertainty was undermining their confidence in the UK market, with 60% warning that it risks losing ground internationally without faster interest rate cuts.

Despite this, 84% expect to increase or maintain their allocation in the UK living sector over the next five years.

Drilling down into the key issues troubling these investors, 92% said the Building Safety Act was having a negative impact on real estate strategies and operations.

Nearly half of respondents (46%) cited regulatory uncertainty as an obstacle to investing in non-owner-occupier residential real estate, nearly double the 28% reported in the previous report in 2023.

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There were positives, however. The financing backdrop has improved with only 22% viewing this as an obstacle now, in contrast from the 45% in 2023.

And half of respondents said the new Renters Rights Act would lead them to increase exposure to the later living sector.

Jonathan Long, head of corporate real estate lending at Investec, said the findings clearly highlighted a “challenging market backdrop” for investment but that there were “grounds for optimism.”

“With several of the headwinds viewed as near-term only, and the fundamentals of the UK living sector — compelling long-term demographic demand and a chronic shortage of high-quality, purpose-built homes — remaining strong, investors are continuing to look through the noise and are positioning themselves for a recovery in 2026,” added Jonathan.

“This resilience has been a consistent theme across the previous editions of our three Future Living reports, which were published during some of the most turbulent market conditions in recent memory.”