As we look ahead to what 2025 may bring, it’s clear that the property market is set to change substantially for landlords during the year. However, uncertainty over what form some of those changes will take, is set to end as 2025 brings greater clarity. Here’s what you need to know:
Regulation requirements will become clearer
One of the biggest impacts on how landlords operate their businesses in 2025 will come from changing regulation. The Renters’ Rights Bill includes a slew of changes to how the market operates as it aims to improve standards and give greater power to tenants. The proposed changes will be significant: an end to Section 21 no-fault evictions and a restructuring of tenancy agreements as a start and additional changes such as ending rental bidding wars.
The bill moves to its report stage in mid-January giving MPs a chance to debate and consider amendments made to the legislation after its committee stage in November. It then has its third reading before the amended draft legislation moves to the House of Lords.
The amended bill, which was published on 8 January, is more than 200 pages so will be a lot for landlords to digest. But they are eager to understand how the changes will be implemented and managed. For some the uncertainty and possibility of increased costs have led to them leaving the market. Others are embracing the opportunity to improve standards. Either way the clarity will be much needed.
Greater understanding of energy efficiency requirements
Similarly, clarity around energy efficiency improvements – and specifically how to achieve them in what is a relatively small timescale – will come this year. It follows a consultation by the government that ends in February on its plans to require Energy Performance Certificates of a C rating or above from 2030.
Rental demand will continue
The easing of mortgage rates, as well as increased confidence in the market, is attracting more people to buy. This is coupled with improved affordability as interest rates continue to fall and wages rise. It means that some tenants are set to become homeowners this year which will lead to a slight easing of supply constraints. However, this is counterbalanced by the fact that some landlords have left the market, reducing the number of properties available.
Strong demand and continued restricted supply will cause further rental growth. Average rents in the East of England were £1,276 in December 2024, almost static compared to the previous month and up 5% for the year as a whole. This is good news for landlords in the Peterborough area.
Costs should become more manageable
The path to low interest rates and low inflation hasn’t been as smooth as had been hoped in 2024 after budget announcements brought nervousness to the market. But further cuts to the base rate are still expected this year which should help to improve affordability. Inflation is expected to average 2.6% in 2025, according to the Office of Budget Responsibility. Changes to the minimum wage and increases in national insurance could still push up prices however as businesses look to absorb their increased costs and will need to be factored into landlord’s considerations.
We Can Help
At Progressive Lets we are experts in the rental market in the Peterborough area and help landlords find and manage properties within a 50-mile radius. Get in touch to find out more.
