2025 Rental Market Predictions For Landlords
The rental market in 2025 is set to experience significant developments. Here's what landlords can expect in the coming year across key areas:
1. Renters’ Rights Bill Likely to Become Law
The Renters’ Rights Bill is poised to bring major reforms, such as abolishing Section 21 evictions and fixed-term tenancies. Progress in late 2024 indicates the bill could become law by the end of 2025. Landlords should prepare by familiarizing themselves with the proposed eviction process and updating tenancy agreements to comply. Despite the importance of these changes, a 2024 survey revealed that 25% of landlords were unaware of the bill, and 63% didn’t know it aims to end fixed-term tenancies.
2. Updates on Energy Efficiency Standards
More details on energy efficiency regulations are expected in 2025, with plans to raise the minimum Energy Performance Certificate (EPC) rating from E to C by 2030. While exact rules are still pending, consultations may outline exemptions, cost caps, and enforcement measures. Research shows that half of landlords will need to upgrade their properties to meet the new standards, with costs potentially ranging from £1,000 to over £10,000. Common improvements include draft proofing, loft insulation, and better windows.
3. Effects of Stamp Duty Changes
From April 2025, landlords will face a higher stamp duty surcharge (five percent) and a lower threshold of £125,000, increasing costs for buyers of cheaper properties. For example, purchasing a £240,000 property will result in a stamp duty bill of £14,300, up from £12,000 before the changes. This is expected to cause a surge in transactions before April, followed by a potential slowdown. However, lower mortgage rates could help offset these increases.
4. Property Prices to Continue Growing
Property values are expected to rise by 4% in 2025, following steady growth in late 2024. Lower mortgage rates and a rush to beat stamp duty changes may drive early-year activity. Despite challenges, many landlords still see buy-to-let as a sound investment, with 40% believing it offers good returns even amid rising costs.
5. Rental Demand to Keep Rents High
Strong demand for rental properties continues to outpace supply, keeping rents high. While the rate of rent increases may slow in 2025, affordability remains a concern in major cities. Between 2021 and 2024, rents rose by 27%, compared to a 19% wage increase. By late 2024, wage growth was finally outpacing rent increases, offering some relief. Landlords will need to balance higher costs with tenant affordability when setting rents.
Stay informed and proactive to navigate these changes effectively in the evolving rental market.
Contact our team for more information:
Office: +44 (0) 203 005 5269
Email: info@mestatesltd.co.uk