2024 saw many private landlords analyse the viability of their portfolios, reassessing whether increased costs and responsibilities were still enabling them to grow a healthy business. For some that meant reassessing portfolios; for others, a decision to leave the sector altogether. So, what’s in store for 2025? Will it be more of the same or a year of even more change? The answer is probably the latter.
Affordability is improving
Budgets were hit hard in 2023 and 2024, and affordability was stretched as both tenants and landlords sought to deal with higher costs. But affordability is improving. Lower inflation has led to lower interest rates and increased confidence in the market. Mortgage rates have started to fall which will see some tenants finally become first-time buyers, but rental demand will continue to remain high.
Improved economy
The hope is that stability around the economy will continue, which will be a confidence boost for landlords. Further base cuts are expected this year although it remains to be seen whether the first cut will be at the February meeting of the Monetary Policy Committee or fall later in March.
Inflation is also expected to remain close to target, although there are worries that it may rise a little as the result of increased prices from businesses trying to cover their higher national insurance costs.
Greater clarity around regulatory change
One of the biggest changes to the private rented sector in 2025 will be the Renters’ Rights Bill, which is currently progressing through parliament. The bill will return to Parliament on Monday 14 January for its report stage where MPs can make amendments and add clauses.
It will then progress to its third reading. This will allow landlords to gain greater clarity over what parts of the bill will make it into law as well as giving a timetable of how and when changes will take place.
A focus on energy efficiency
Landlords will also need to use 2025 to focus their efforts on energy efficiency with the government introducing further changes to its Minimum Energy Efficiency Standards (MEES) this year. The government is currently consulting on its plans for private rented homes to achieve Energy Performance Certificate C or equivalent by 2030.
The consultation will end on 26 February, with further details of how the plan will be implemented expected shortly after. Since energy efficiency also helps your tenants to save cash, then investigating how you can improve your property ahead of the legislation’s deadline will help to win tenants.
A tightening of rents
Rental inflation has slowed as tenants have struggled with their own affordability challenges. 2025 will bring further constrictions on rental prices. The Renters’ Rights Bill will include measures to stop rental bidding wars.
It will obligate landlords and letting agents to publish asking rents and prohibit them from asking for, encouraging or accepting bids above this price. The regularity of rent increases will also be restricted.
2025 is likely to be a year of change but for those who embrace the changes there are still opportunities, especially as landlords exiting create even greater demand for properties.
For more information on how Kings Group can assist you on your letting journey, please contact one of our branches in Essex, London or Hertfordshire today. We also offer a free and instant online valuation to give you an idea of how much your home could be worth on the current market.
