The latest UK rental market forecast is predicting the potential impact on landlords of changes expected in 2025 – concluding this is a “significant year” for the sector. Analysts believe new laws, combined with increasing Stamp Duty, could cause some landlords to re-evaluate their portfolios, with the potential for downsizing.
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1. New protection for tenants
The Renters’ Rights Bill is set to become law in 2025, providing greater tenant protection. Some of the key changes include permitting only one rent increase annually and banning “rental bidding”. Landlords will be required to state the rent and won’t be allowed to accept any bids over the asking price.
If approved, there will also be a new ombudsman service for the private rental sector, requiring landlords to take prompt action to fix issues and pay compensation when appropriate. The Bill also forbids landlords from imposing a blanket ban on tenants keeping pets, with each case considered on its own merits.
The legislation will apply across England and much of it will also cover Wales. North of the border, The Housing (Scotland) Bill is due for consultation in Spring, with the aim of providing safe, secure and affordable housing, including a rent cap to prevent excessive increases. The new law doesn’t cover the private rental sector in Northern Ireland.
2. No-fault eviction ban resurrected
The Renters’ Rights Bill is also likely to abolish “no fault” Section 21 evictions to protect tenants further. The previous Conservative government had pledged to implement the ban, but then postponed it on the grounds it would require updating the legal system first. The current government has said the ban will come into force as soon as the Bill becomes law.
It will also offer greater support for landlords who need to reclaim their rental property in situations deemed reasonable, such as if they need to move into it themselves, or if they’re selling their portfolio.
3. Properties must meet higher standards
Plans for a new Decent Homes Standard in the UK’s private rental sector were first mooted during the King’s Speech in July 2024 – aimed at ensuring properties are safe and tackling the “blight of poor-quality homes”. In addition, Awaab’s Law is set to be extended to private housing. Named after Awaab Ishak, who tragically died at the age of two in December 2020 after living with mould at his home in Rochdale, it will set strict deadlines on how quickly landlords must respond to hazards in their rental properties.
Studies reveal high-speed Wi-Fi and good quality fixtures and fittings are UK tenants’ most important requirements today. In order to meet new demands, a landlord furniture packs can enhance the aesthetic appeal and value of a property. In addition, landlord furniture packages are also guaranteed to meet legal fire safety requirements.
4. No blanket bans on tenants
The Bill will make it illegal for landlords in England and Wales to impose a blanket ban on tenants who receive benefits, or those who have children. There are plans to extend the ban to Scotland at a future date. The changes won’t apply in Northern Ireland, although landlords who impose a blanket ban may be breaking anti-discrimination legislation.
Landlord UK advice will be available on the government’s website on each stage of the Bill as it makes its way through Parliament to help keep you up to speed with the changes.
5. New database for rented sector
The government has revealed it’s set to launch a new Private Rented Sector Database, bringing together useful information for local authorities, landlords and tenants. While there are no details yet on what details the database will store, the government has explained it will give guidance to landlords on their legal obligations and provide more information for tenants.
6. Rents are set to increase
Rents have been increasing steadily during the past few years and the trend looks set to continue. Data from Hamptons estate agency confirms UK-wide rent costs increased by 2.6% year-on-year in November 2024. The biggest increase of 7.2% was in Scotland, followed by the North of England at 5.7%.
The rate has slowed down significantly since November 2023, when the annual increase was a massive 10.2%. Savills and Knight Frank estate agencies are predicting increases of 4% in 2025. Any rise can be a double-edged sword for landlords; although it can increase income, it also has the potential to cause higher tenant turnover if the rent is perceived as being too high and uncompetitive in the market.
7. Mortgage rates look likely to fall
There could be good news for landlords planning to remortgage or buy new properties, as mortgage rates look set to fall. The Bank of England’s current base rate is 4.5%, but analysts anticipate it could fall to 4% by the end of the year, reducing mortgage interest rates.
However, this may be countered by higher payments for those who locked into a set rate between 2020 and mid-2022, before interest rates rocketed. As those contracts end, landlords may not be able to find a similarly low mortgage rate and could see a sudden steep rise in expenditure. A base rate of 4% is still higher than the December 2021 rate of 3.07%.
8. Rise in Stamp Duty
The government announced a two-percentage-point increase in Stamp Duty in England and Northern Ireland on buy-to-let properties and second homes in the Autumn Budget 2024. This will mean more expenses for landlords planning to expand their rental portfolio, as in April 2025, further changes relating to Stamp Duty are set to come into effect in England and Northern Ireland, meaning homebuyers will pay an extra £2,500 in tax on average.
9. Energy reforms back on the agenda
The Conservative government had discontinued plans to introduce new minimum energy standards for rental properties in England and Wales, saying the burden of extra expense may be too much for landlords when times were already hard, but the Labour government has resurrected similar energy reforms.
The latest proposals include requiring rental homes to achieve a minimum Energy Performance Certificate rating of C by 2030. This could be costly for landlords, especially for those with older properties. Around 340,000 rented homes per year would have to be improved to meet the deadline, with landlords paying for the changes.
10. More landlords could leave the sector
Market analysts feel the changes in 2025 could lead to more landlords leaving the sector due to rising costs. Research suggests “significant numbers” have already disposed of their rental properties, with 8.5% declined in 2024. This would lead to a decrease in the number of available properties, as those who don’t sell up will be less likely to expand their portfolio, with the shortage keeping rents higher for tenants.
The new landlord rules 2025 could have a significant impact on the rental market: only time will tell whether more red tape will deter some from carrying on.