diff --git a/ElementX/Sources/Other/HTMLParsing/AttributedStringBuilder.swift b/ElementX/Sources/Other/HTMLParsing/AttributedStringBuilder.swift
index 489cdac75..bcaa0f44b 100644
--- a/ElementX/Sources/Other/HTMLParsing/AttributedStringBuilder.swift
+++ b/ElementX/Sources/Other/HTMLParsing/AttributedStringBuilder.swift
@@ -43,6 +43,8 @@ nonisolated struct AttributedStringBuilder: AttributedStringBuilderProtocol {
     private let mentionBuilder: MentionBuilderProtocol
     
     private static let attributeMSC4286 = "msc4286-external-payment-details"
+    /// Tags whose content already ends in a newline.
+    private static let lineTerminatingTags: Set = ["p", "div", "h1", "h2", "h3", "h4", "h5", "h6", "hr", "ul", "ol", "li"]
     private static let caches = Mutex<[String: LRUCache<String, AttributedString>]>([:])
     
     static func invalidateCaches() {
@@ -119,6 +121,14 @@ nonisolated struct AttributedStringBuilder: AttributedStringBuilderProtocol {
         
         for node in element.getChildNodes() {
             if let textNode = node as? TextNode {
+                // Markdown generated HTML separates block elements and list items with newlines.
+                // SwiftSoup normalises those whitespace only nodes into stray spaces which misindent
+                // the following line, whereas HTML rendering collapses them away entirely.
+                if !preserveFormatting, textNode.isBlank(),
+                   Self.isLineTerminating(node.previousSibling()) || Self.isLineTerminating(node.nextSibling()) {
+                    continue
+                }
+                
                 // If this node is plain text append the whitespace normalised version
                 if node.parent() == documentBody {
                     result.append(NSAttributedString(string: textNode.text()))
@@ -278,6 +288,14 @@ nonisolated struct AttributedStringBuilder: AttributedStringBuilderProtocol {
         return result
     }
     
+    private static func isLineTerminating(_ node: Node?) -> Bool {
+        guard let element = node as? Element else {
+            return false
+        }
+        
+        return lineTerminatingTags.contains(element.tagName().lowercased())
+    }
+    
     private static func cacheValue(_ value: AttributedString?, forKey key: String, cacheKey: String) {
         caches.withLock { caches in
             if caches[cacheKey] == nil {
diff --git a/UnitTests/Sources/AttributedStringBuilderTests.swift b/UnitTests/Sources/AttributedStringBuilderTests.swift
index d606982ab..a215c8d39 100644
--- a/UnitTests/Sources/AttributedStringBuilderTests.swift
+++ b/UnitTests/Sources/AttributedStringBuilderTests.swift
@@ -649,7 +649,28 @@ struct AttributedStringBuilderTests {
         
         let attributedString = try #require(attributedStringBuilder.fromHTML(htmlString), "Could not build the attributed string")
         
-        #expect(String(attributedString.characters) == "like\n    • this\ntest")
+        #expect(String(attributedString.characters) == "like\n  • this\ntest")
+    }
+    
+    /// Markdown generated HTML separates block elements with newlines which used to normalise
+    /// into stray spaces, indenting the first list item deeper than the ones that followed.
+    @Test
+    func interBlockWhitespace() throws {
+        let htmlString = "<p>intro:</p>\n<ul>\n<li>first</li>\n<li>second</li>\n</ul>\n"
+        
+        let attributedString = try #require(attributedStringBuilder.fromHTML(htmlString), "Could not build the attributed string")
+        
+        #expect(String(attributedString.characters) == "intro:\n  • first\n  • second")
+    }
+    
+    /// Whitespace between inline elements is meaningful, unlike the inter block variety.
+    @Test
+    func interInlineWhitespace() throws {
+        let htmlString = "<del>one</del> <del>two</del>"
+        
+        let attributedString = try #require(attributedStringBuilder.fromHTML(htmlString), "Could not build the attributed string")
+        
+        #expect(String(attributedString.characters) == "one two")
     }
     
     @Test
@@ -694,7 +715,7 @@ struct AttributedStringBuilderTests {
         
         let attributedString = try #require(attributedStringBuilder.fromHTML(htmlString), "Could not build the attributed string")
         
-        #expect(String(attributedString.characters) == "   2. this is a two")
+        #expect(String(attributedString.characters) == "  2. this is a two")
     }
     
     @Test
@@ -725,7 +746,7 @@ struct AttributedStringBuilderTests {
         """
         let attributedString = try #require(attributedStringBuilder.fromHTML(html), "Could not build the attributed string")
         
-        #expect(String(attributedString.characters) == "Stefan pushed 2 commits to main:\n   •  Some update \n   •  Some other update")
+        #expect(String(attributedString.characters) == "Stefan pushed 2 commits to main:\n  •  Some update \n  •  Some other update")
     }
     
     // MARK: - Phishing prevention