2025 Predictions for the Private Rental Sector
Allison Thompson, National Lettings Managing Director, Leaders Romans Group (LRG)
“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.”
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