Key Events for Landlords in 2025

As 2025 begins the private rental sector is set to undergo substantial changes that will significantly affect landlords all over the UK. With the new UK Government set to implement new legislation, not to mention a raft of other substantial changes brought about following the Autumn 2024 budget, proactive preparation by landlords will be essential to the protection of their existing property portfolios.

This short guide will walk you through the critical forthcoming developments that will influence your property investment strategy in 2025.

Will 2025 Be Positive for Buying and Letting?

The property market in 2025 presents both challenges and opportunities. Despite potential market fluctuations, several factors suggest a positive outlook for ambitious and proactive investors:

• Rental demand will continue, especially in major urban areas
• Rents for landlords have maintained growth, increasing by 8.7% from October 2023 to October 2024 (which is a 0.3% increase from September 2023 to September 2024)
• Emerging markets in areas with strong economic fundamentals show strong potential

Landlords who thoroughly research local markets and focus on properties in high-demand locations can still secure promising returns.

How Will the Autumn Budget Affect Landlords in 2025?

In a nutshell, landlords should be prepared to make financial preparations in the wake of new changes, including:

• Potential adjustments to tax relief mechanisms
• Possible changes to capital gains tax (CGT) thresholds
• New incentives for energy-efficient property investments

Landlords should prepare by carefully calculating potential returns, accounting for interest rate fluctuations, maintaining flexible investment strategies and considering long-term property value appreciation.

What Will Happen With Taxes for Landlords in 2025?

Key tax-related developments include:

• Increases in CGT tax rates (lower rate rising to 18% and higher rate rising to 24%)
• CGT rates on residential properties (including buy-to-let and second homes) remain at 18% and 24% for lower and higher rates, respectively
• SDLT (Stamp Duty Land Tax) increasing to 5%
• Private Residency Relief remains unchanged

The Renters’ Rights Bill: A Watershed Moment

The most drastic change for landlords comes in the form of the Renters’ Rights Bill. At the time of writing, it is currently in the report stage in the House of Commons, and pending any substantial changes throughout both the Commons and the House of Lords, should make its way into UK law in the first half of 2025.

The Renters’ Rights Bill is one of the most substantial rental regulatory overhauls in recent years, with profound implications for landlords and the wider rental market.

Key Legislative Changes

Assured shorthold tenancies to be abolished

The traditional fixed-term tenancy model is set to be consigned to history. From 2025, expect to see:

• Automatic conversion to periodically assured tenancies once the Bill passes into law
• Tenants can provide two months’ notice to end tenancy at any time
• A ban on advance rent payments
• Rent periods limited to one month

Section 21 evictions abolished (and Section 8 evictions updated)

The abolition of Section 21 (‘no fault’) evictions marks a fundamental shift in landlord-tenant relationships. With assured shorthold tenancies set to be scrapped, the abolishment of Section 21 notices is not surprising, meaning landlords will have to justify a reason for reclaiming possession of properties.

Expect to see the following also:

• New grounds for Section 8 evictions and repossessions
• Mandatory deposit protection for Section 8 eviction proceedings
• The implementation of Ground 1A rules, allowing landlords to give 4 months’ notice in order to sell the property (once this notice ends, there is a 12-month restricted period where it may not be re-let)
• The introduction of Ground 4A rules for student accommodation
• A 12-month protected period at the beginning of tenancies where no notice can be served (with the exception of rent arrears)

Financial Considerations for 2025

• Rent Increases and Market Dynamics
• Landlords will face new constraints on rent adjustments. 2025 will be the year where:
  • Standardised rent increases process via a Section 13 Notice, where tenants will need to be notified with two months’ notice.
  • Any rent increases will be limited to standard market rent rates, and any incumbent clauses or agreements will not be valid.
  • Tenants can challenge rent increases at the First-Tier Tribunal free of charge, if an increase is above market rates.
• Compliance and Regulatory Obligations
• Ombudsman Membership
  • Landlords new to the private rental sector will need to join an official Ombudsman organisation, which will also function as a redress scheme.
  • This mandatory membership will be enforced whether a landlord uses an estate agent or not. Failure to join will see landlords face fines of up to £40,000 for non-compliance.
  • The Ombudsman will provide dispute resolution and compensation services to previous, current and prospective tenants, enforcing landlords to carry out remedial action and provide further information to tenants where applicable.
• Private Rental Sector Database
  • Landlords must now register themselves as individuals and their properties on a new Rented Property Portal. There is a yet-to-be-determined fee for registration, but if they do not join, they will not be able to gain any possession orders, and risk penalties for non-compliance or criminal prosecution.
• Tenant Rights Expansion
• Pet Consent and Accommodation
  • A new framework for pet-related tenancy agreements is set to be introduced. Tenants now have the right to request consent from the landlord, and refusals can only be given for specific reasons. Landlords must respond within 28 days, and have the right to appeal to the new Ombudsman service or through the courts. Pet insurance will be implied within any tenancy agreement, and the tenant will be liable directly or will need to reimburse the paying landlord.
• Awaab’s Law
  • The Renters’ Rights Bill will now extend Awaab’s Law to privately rented homes, enforcing new safety requirements for landlords to address hazards like mould and damp within a specified time period. If they do not comply, tenants can enforce legal action against them for breach of contract.
• Anti-Discrimination Measures

Blanket bans on renting to specific groups are now prohibited. With new changes, any landlord:

• Cannot discriminate against tenants receiving housing benefits
• Cannot refuse tenants with children
• Affordability remains a valid screening criterion

This also extends to mortgages, lease agreements and insurance contracts.

Delays to tenant applications can still be enforced by landlords if affordability is a concern.

Other Changes:

• The Government will extend rent repayment orders and civil penalties to local councils. Local councils will be able to issue civil penalties against landlords for illegal evictions of tenants.
• New and enhanced investigatory powers will make it easier for councils to obtain financial information from landlords when building a case against them for suspected unscrupulous activities.
• The maximum amount of rent a landlord can be ordered to pay – through a repayment order – will extend to 24 months.

Protecting Your Investment

With complex rental arrangements emerging, obtaining landlord insurance quotes has never been more vital. Protect My Let offers comprehensive coverage designed to navigate these legislative challenges, providing peace of mind in an evolving rental market.

Before this is enforced, we recommend that all landlords:

1. Review and update all existing tenancy agreements
2. Ensure compliance with new Ombudsman and registration requirements
3. Reassess your property portfolio’s financial viability
4. Consider professional legal consultation
5. Review and potentially upgrade your landlord insurance coverage

2025 represents a pivotal year for private landlords. While these changes may seem daunting, they also present opportunities for professional, responsible property investors who adapt quickly and strategically.