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2025 could be a significant year for the rented sector, with a suite of new reforms to improve standards for tenants likely to come into force.
The changes, coupled with rising stamp duty and new energy efficiency rules, could lead some landlords to reevaluate the size of their portfolios.
Read on to find out about the key things that landlords and tenants will need to be aware of as we enter the new year.
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The Renters' Rights Bill is currently progressing through parliament and is likely to become law in 2025.
The bill contains a series of new protections for tenants. These include limiting rent increases to one per year and ending the practice of ‘rental bidding’. Landlords and letting agents will be required to publish an asking rent for their property and will be prohibited from accepting any bids above this price.
In addition, a new ombudsman service has been proposed for the private rented sector. The service would have the power to compel landlords to provide information to tenants, take remedial action to fix issues, and/or pay compensation.
Finally, tenants will have the right to request to keep a pet, with landlords no longer able to impose blanket bans on animals.
The previous government had long planned to abolish Section 21 'no-fault' evictions but postponed the move as it said it would first need to make changes to the legal system.
However, the new Renters' Rights Bill includes a pledge to ban Section 21, which the government says would come into force immediately upon the Bill passing into law.
It also includes measures to provide support for landlords to reclaim their properties in reasonable situations, such as if they are selling or moving into the home themselves.
Another planned change is the introduction of a new Decent Homes Standard for the private rental sector, aimed at ensuring properties are safe to live in.
The Bill will also extend Awaab’s Law to the private rented sector. This will set clear deadlines for landlords to address serious hazards with properties.
If landlords do not meet these deadlines, renters would be able to take action against them through the courts.
The Bill also includes legislation to make it illegal for landlords and letting agents to impose blanket bans on tenants who receive benefits or have children.
These proposed changes will initially apply to England and Wales, with plans to extend them to Scotland later in the parliamentary process.
In Northern Ireland, the changes will not apply, but landlords who enforce blanket bans may be in breach of anti-discrimination laws.
The government has unveiled plans to introduce a new Private Rented Sector Database.
This is designed to bring together key information for landlords, tenants and local authorities.
The government hasn't yet confirmed exactly what information will be in the database, but says it will provide more information for tenants and give guidance to landlords about their obligations.
Rents have increased significantly over the past few years, but there are signs that things are slowing down.
The latest data from the estate agency Hamptons shows that rents increased by 2.6% year-on-year in November. By contrast, the figure was 10.2% last November.
The biggest rises this year have been recorded in Scotland (7.2%), the North of England (5.7%) and the Midlands (5%).
The estate agencies Knight Frank and Savills both predict that rents will rise 4% in 2025.
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Listen nowMortgage rates should drop in 2025, providing good news for landlords who want to buy new properties or need to remortgage.
It's anticipated that the Bank of England's base rate (currently 4.75%) could end the year at around 4%, pushing down mortgage rates.
Some landlords will still face higher bills, however. Those who locked in five-year fixes between 2020 and mid-2022 when rates were cheap will face a hike in repayments when they remortgage.
Currently, the average fixed-rate buy-to-let mortgage is priced at 5.42%, according to Moneyfacts. This is lower than the 6.02% recorded a year ago but much higher than the average of 3.07% in December 2021.
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In the Autumn Budget, the government introduced a two-percentage-point increase in stamp duty on buy-to-let properties and second homes in England and Northern Ireland, which will come into effect immediately. This will make it more expensive for landlords to expand their portfolios.
From April, further changes to stamp duty thresholds will come into force in England and Northern Ireland. This will mean most homebuyers will need to pay an additional £2,500 in tax.
The previous government scrapped its plans to require rented properties to meet minimum energy standards in September last year.
However, the new government has confirmed its intention to bring in similar measures. Under the proposals, rented homes would need to achieve a minimum Energy Performance Certificate (EPC) rating of C by 2030.
It is estimated that around 340,000 rented homes would need to be improved each year to meet this target. Landlords will need to foot the bill for the changes, although a spending cap is likely to be implemented.
Landlords have been selling more homes than they've been buying in recent years, and the upcoming changes in 2025 could result in more deciding to dispose of properties.
Those who don't sell may be less likely to expand their portfolios due to the rise in stamp duty rates. Landlords who do wish to invest further may focus their attention on properties in cheaper areas, such as the North East of England.
Fewer available properties could result in greater competition between tenants, keeping rents high. If you're worried about the cost of renting, see our guide on what to do if you can't pay your rent.
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