What should buy-to-let landlords expect in 2025?

What should buy-to-let landlords expect in 2025?
 

After a year shaped by political shifts and regulatory uncertainty, 2025 brings new opportunities and challenges. Here are five rental market predictions to watch out for:
 

1. Renters’ Rights Bill Progressing Toward Law

The proposed bill aims to overhaul tenancy laws, including abolishing Section 21 evictions and fixed-term tenancies.

Currently at the report stage in the House of Commons, it’s likely to become law by the end of 2025.

Landlords should prepare by understanding the new eviction process and updating tenancy agreements.

Despite its significance, a 2024 survey found 25% of landlords were unaware of the bill, and 63% didn’t know it includes ending fixed-term tenancies.

2. Energy Efficiency Standards Under Review

Changes to Energy Performance Certificate (EPC) requirements could increase the minimum rating from E to C by 2030.

Details like exemptions, cost caps, and enforcement timelines may emerge through consultations in 2025.

Upgrading properties could be costly, with many landlords anticipating expenses ranging from £1,000 to over £10,000.

Most common improvements:

Draft-proofing

Loft insulation upgrades

Window enhancements 

3. Stamp Duty Changes Take Effect

From April 2025, the stamp duty surcharge for landlords rises to 5%, with thresholds lowered from £250,000 to £125,000.

Eg: A £240,000 property purchase after April would incur £14,300 in stamp duty, up from £12,000 before the change.

A surge in transactions is expected before April, potentially followed by a slowdown.

4. Property Prices Likely to Rise

Following a rebound in late 2024, average asking prices are predicted to grow by 4% in 2025, driven by lower mortgage rates.

While fewer landlords plan to buy, strong yields and stable long-term values keep buy-to-let investments attractive.

5. High Rents Persist Due to Demand

Despite moderating growth, rental demand remains strong, with average asking rents increasing 27% between 2021 and 2024.

Landlords should balance rent adjustments with tenant affordability, as earnings are now rising faster than rents.

By staying informed and prepared, landlords can navigate the shifting rental market landscape in 2025.