2025 Lettings Market: What to expect
The Christmas and New Year celebrations feel like a distant memory, and we are now firmly into 2025. With the year well underway, it’s the perfect time to focus on planning and preparing for what lies ahead. The UK lettings market continues to evolve, presenting both opportunities and challenges for landlords, tenants, and investors alike.
After carefully reviewing the current trends and insights, we’ve put together some key predictions for what we might expect to see in the coming months:
• Supply and Demand
The rental market continues to experience a supply-demand imbalance. Although the availability of rental homes has improved slightly, it remains 24% below pre-pandemic levels. This shortage is expected to sustain upward pressure on rents, though affordability constraints may temper the rate of increase.
Locally in Worcestershire, this reflects the national picture, although we saw a tapering off of demand levels in the build up to Christmas, our Rightmove stats are still seeing an average of 25 leads per property listed in the first month of listing.
• Legislation
The anticipated Renters’ Rights Bill is set to introduce significant reforms, including the abolition of Section 21 ‘no-fault’ evictions and the establishment of a landlord register. These changes aim to enhance tenant security and property standards. At Nicol and Co we have begun forward planning for the changes, with further updates to follow. More significant updates are expected in the spring or summer months.
• Mortgages
As quoted by Matt Nicol in our regular episodes of “Mortgage Watch”, we are seeing a stabilisation on rates in the market. The Bank of England’s recent interest rate cuts may lead to more favorable mortgage conditions, which may have a positive impact for landlords.
• Taxation
As announced in the Autumn budget, there are some tax changes are on the horizon. From April 2025, the stamp duty surcharge for landlords will increase from 3% to 5%, and the threshold at which stamp duty becomes payable will be reduced from £250,000 to £125,000.
Our view is that the surcharge means that purchasing with confidence is key, and making sure that the property investment strategy works, in order to mitigate the up front cost.
We plan at Nicol and Co to keep our ears to the ground as the year unfolds. If you have any queries or want to discuss any of this with us, please do not hesitate to call us today on 01905 675 999, or email [email protected].