As we step into 2025, it’s the ideal moment to reflect on the UK property market in 2024. The past year was one of recovery and adaptation and was an unpredictable year for UK landlords. There was a general election, reforms and tax changes to deal with.
January 2024: Leasehold and Freehold Reform
The year began with the Leasehold and Freehold Reform Bill reaching the committee stage. This was aimed at simplifying the process for leaseholders to extend leases and purchase freeholds. This Bill will significantly alter the property sector, especially if more leaseholders exercise these rights.
March 2024: Spring Budget- A little relief
The Spring Budget in March was a mixed bag for landlords, they got a slight break with a reduction in Capital Gains Tax (CGT) rate on property, which went from 28% down to 24%. However, the budget also cut multiple dwelling relief, meaning anyone purchasing more than one property now pays full stamp duty on each dwelling. While self-employed landlords caught a small break with cuts in NIC (National Insurance).
April 2024: Capital Gains Tax hit again
The downward shift in tax free capital gains allowances in April was another hit, halving the threshold from £6,000 to £3,000. Landlords, already facing tighter budgets due to rising costs are seeing returns further tightened. This has raised concerns about the viability of smaller buy to let properties.
May & July 2024: Election and Leasehold / Freehold Reform
There was mayhem when Prime Minister Rishi Sunak decided to announce a general election which then led to the end of his reign and that of the Tories. During this period the Leasehold and Freehold Reform was passed (or rushed through), introducing the vital change for leaseholders to make it easier to purchase the freehold and extend leases while being able to challenge landlords over service charges.
However, the anticipated Renters Rights (Reform) Bill which proposed ending to “no fault evictions (Section 21)” and implementing a landlord register was put on hold temporarily. Labour would later revisit this reform.
August 2024: Labour win Election
With Labour winning the election after last being in power in 2010, there was fresh hope for the property industry, but this was short lived. A new era of renter-centric policies merges, placing additional pressure on landlords. The new Labour government was to focus on the tenant protection and pushing some landlords out of the market. Labour promised to keep a balanced policy however many landlords dispute this and raised concerns over increased restrictions and compliance hitting their bottom line.
September 2024: Labours Renters Rights Bill
The updated version of the Renters Rights Bill confirmed the end of “no fault evictions (Section 21)” and restrictions on rental bidding wars whilst also raising the arrears threshold and extending notice periods for eviction.
These changes limit landlords flexibility and ability to obtain their property back, they also provide clearer guidelines on property repossession.
October 2024: Autumn Budget
There were many rumours flying round prior to the budget regarding capital gains tax hikes but this didn’t materialise whoever there was another shock on the cards. A 2% rise in stamp duty on second homes / investment properties which was effective with immediate effect, meaning the new rate was now 5%.
The feeling in the market from investors and landlords was that it would be harder to make property deals stack and rents would rise, or landlords would refrain from investing further and thus reducing rental stock meaning a shift in demand and supply yet again.
Landlords regret voting Labour
In a severe case of buyer’s remorse, Labour-voting landlords are expressing deep regret over their political choice, according to a survey. Buy to let lender Landbay found that 80% of these landlords now admit they would not vote Labour again.
They point to the Chancellor Rachel Reeve’s decision to increase Stamp Duty on investment properties as a major factor. Also, most private landlords are also not pleased to be tarred with the same brush as ‘rogue landlords’.
Landlord confidence has dropped due to looming legislation and upcoming energy-efficiency changes. Research by Savills reveals that 73% of landlords have felt less confident in the past year, driven by concerns over the Renters’ Rights Bill and the potential abolition of Section 21.
Landlords are also worried about bearing the burden of energy-efficiency upgrades to their properties, which could cost them thousands of pounds.
Concerns over the Renters’ Rights Bill and Autumn Budget.
According to Savills, more than 82% of landlords’ confidence has plummeted due to the Renters’ Rights Bill, with 69% citing the Autumn Budget as a contributing factor. Chancellor Rachel Reeves announced that landlords would face a stamp duty surcharge increase from 3% to 5% on additional homes.
Analysis by Capital Economics reveals that raising stamp duty on rental properties from 3% to 5% could result in a net loss of half a million rental homes over the next ten years. More than half of landlords (57%) say they have ‘significant concern’ about the increase in notice periods to recover possessions in the Renters’ Rights Bill.
The Bill will require landlords to give tenants four months’ notice to regain possession. However, if the landlord or a family member wishes to move in, possession cannot be sought during the first year of a new tenancy.
According to the research by Savills, 50% of landlords have ‘significant concern’ about the abolition of Section 21 and 31% with rent review procedures in the Renters’ Right Bill.
EPC concerns
The survey also reveals that 41% of landlords have significant concerns over energy-efficiency changes. Ed Miliband has announced all private rented properties must meet an EPC C target by 2030.
According to the survey, 40% of landlords would spend up to £2,000 improving a property’s EPC rating. However, landlords could face having to pay double that, with research by epIMS showing that upgrades could cost as much as £8,000.
The Savills survey reveals only 12% of landlords are willing to spend more than £5,000 to improve a property.
In Summary
2024 has been a year of recalibration, setting the stage for steady and sustainable growth in 2025 and beyond. Whether you're an investor, first-time buyer, or developer, 2025 presents exciting opportunities for those ready to act.