As the year draws to a close and we look ahead to 2025, there are plenty of reasons for landlords and brokers to approach the next 12 months with optimism.
There are five areas which I believe will define the year.
STABILITY
Let’s face it, stability is not a word we’ve heard much over the past decade. From Brexit to Covid to the mini-Budget, it’s been volatile, marked by political and economic upheaval. We enter the new year with a focused Government and with some form of economic stability.
Yes, the economy is only just stuttering into life, but the conditions required for businesses to achieve growth are much better than in previous years.
The buy-to-let market has recovered after a dour 2023 and we expect 2025 to deliver further growth across the market.
REMORTGAGE
Industry data indicates that over 190,000 buy-to-let mortgages worth £26.2 billion will mature next year. That presents a lot of opportunities for intermediaries. This includes 136,898 five-year fixes from 2020 and 54,017 two-year loans from 2023.
Clients with maturing two-year fixes may see lower rates, while those with five-year products could face higher rates, although a 33% rent increase over the past five years underpins their propositions. The diverse market means landlords are coming off varied rates, fees and ICRs, making brokers more valuable as they navigate this complexity.
LEGISLATION
The Renters Reform Bill has morphed into the Renters’ Rights Bill (RRB) under the Labour Government, but the central component – the removal of Section 21 – remains the same.
The RRB will significantly change how the private rented sector operates and will take some time to bed in. We are urging the Government to adopt a sensible implementation timeframe in order to not disrupt the market too much too soon, which would mainly be to the detriment of tenants.
On the plus side, landlords are used to dealing with an ever-shifting regulatory environment and I’m confident they will continue to do so when this Bill becomes law.
EXPANSION
A huge imbalance between rental property supply and tenant demand has marked the past five years. This has tempered in recent months but, make no mistake, we need more rental property to cope with forecast levels of tenant demand. The population is forecast to grow by 10% by 2036 and the build-to-rent sector will not keep pace.
The profile of tenants is splintering, with people from all walks of life now choosing or needing to rent, so we will need a broad range of property to suit these disparate needs. This presents lots of opportunities for landlords to expand their portfolios.
SPECIALIST
The move towards more specialist, portfolio landlords seen over the past decade will continue in 2025. The increase in Stamp Duty for additional properties across England, Scotland and Wales will further deter existing one-property landlords from expanding their portfolios, but, from our experience, larger portfolio landlords will adapt and continue to grow. For many, it’s their business and the Stamp Duty changes are just another factor to consider.
