Predictions for the lettings market in 2025

The ‘one to watch’ in 2025 is the Renters’ Rights Bill (RRB) which is expected to pass more or less in its current form and come into force possibly as early as the spring.

The overhaul of tenancy agreements, removal of Section 21, changes to section 8 grounds and introduction of a landlord register and Ombudsman, is predicted to result in some landlords exiting the market. At the same time, the 2% increase in higher-rate stamp duty could discourage new investment in buy-to-let. And if the supply of rental accommodation reduces, that could make it harder for tenants to find a new home – although the RRB changes should mean tenants can expect a better quality of accommodation.

For landlords, the biggest challenge is going to be understanding what changes will be required under a Renters’ Rights Act and administering those changes to ensure legal compliance. With the Government’s focus on driving up standards and increasing enforcement powers for local councils, it’s essential to take expert advice to make sure you don’t fall foul of the law. If you’d like to talk through any of the proposals, just get in touch with your local branch and one of our lettings experts will be very happy to help.

What’s likely to happen to rents in 2025?

A shortage of stock for rent is still a significant problem in many areas. Zoopla’s latest rental market report revealed the supply of homes for rent in September was 24% lower than the pre-pandemic average, however average rent growth is slowing as affordability in larger cities has begin to limit what tenants can afford. Meanwhile, rents in adjacent areas are still being pushed up.

And in 2025, with the RRB limiting rent rises to once a year and outlawing ‘bidding wars’ for new tenancies, we expect to see landlords pricing new lets optimistically. But with the minimum wages rising in April and average income growth currently rising at twice the rate of inflation, that should support affordability for most tenants.

From a tenant’s perspective, though, if you’re thinking of moving it may be better to do it sooner rather than later so you can ‘lock in’ your rent for the next 12 months.

What does our Lettings MD think?

Allison Thompson, National Lettings Managing Director at Leaders Romans Group (LRG) which we're part of, says:

“As we approach 2025, the lettings industry is entering a phase marked by stabilisation and opportunity. Rental inflation has slowed to an average of 3-4% for new lets, reflecting the effects of affordability constraints; renters’ budgets are beginning to limit how much rents can rise. Despite this moderation, high demand persists, especially in regions with limited rental stock, positioning landlords with well-maintained properties to benefit from stable rental yields.

“Supply remains constrained, with data showing that around 12% of current property sales are from landlord disposals, yet this is a controlled exit, not a mass exodus. Many landlords are seizing the chance to adapt, whether by modernising properties to meet growing tenant interest in energy-efficient homes or adjusting portfolios in line with potential new energy regulations. This gradual shift aligns with tenants’ increasing prioritisation of sustainable housing, setting up an environment where landlords who invest strategically may gain a competitive edge.

“Mortgage rates, which now stabilise in the low 4% range, have shown signs of easing affordability pressures on homebuyers. As a result, there may be a gradual uplift in first-time buyer numbers, potentially softening rental demand in the long term. However, the Private Rented Sector (PRS) remains indispensable, providing accessible housing for those not yet ready to buy and ensuring continued demand for rental properties across the UK.

“The anticipated Renters’ Rights Bill (RRB) introduces an element of uncertainty for the coming year, but its impact will likely unfold progressively as its specifics become clearer. Meanwhile, energy performance standards are a focus for many landlords, with the possibility of requiring EPC ratings of ‘C’ or above. Although these changes are not due to come into effect until 2030, Landlords will be considering how these changes affect their plans over the interim period. While these changes are intended to improve housing standards, we do need to consider the impact they could have on the sector over the long term.”

Over the course of Labour’s five-year term, real estate consultants JLL expect rental growth to exceed inflation and wages, and that average rents will rise by 17% between now and the end of 2029.

While it’s good news that the outlook for the lettings market is positive, rents and supply and demand can vary significantly from one area to another, so it’s essential to understand what’s happening at a local level. Our lettings experts are always happy to share their market knowledge and help both landlords and tenants secure an appropriate tenancy – just get in touch with your nearest branch and have a chat to one of the team.