As we move into the second quarter of the year, I wanted to share an update on the UK property market based on activity and legislative changes from Q1 2025. I understand that there may be a lot of information to digest, but these developments are particularly relevant for investors with interests in the residential market.
1. Renters’ Rights Bill 2025
The Renters’ Rights Bill, once introduced in 2025, will bring reforms to tenancy law. All existing and new tenancies will move to periodic agreements, replacing fixed-term contracts entirely. Tenants will be allowed to give two months’ notice at any time, while landlords will be required to provide a valid reason for repossession e.g. 4 months’ notice to sell. The bill also introduces new requirements for transparency in the marketing of rental properties, whereby agents shall not be permitted to accept offers above the rental marketing price. Additionally, it introduces clearer limits on the level of rent that can be paid upfront—particularly relevant to student lettings. There appears to be negativity surrounding the bill amongst the industry and investors, but we do believe it shall have a positive impact in the longer term. Property Management service shall need to be compliant, have systems/processes in place, and improve service levels to prevent a higher turnover of tenants Property agents shall require a broader knowledge of the rental/sales market/UK economy when advising clients on medium to long-term strategies for their investments.
2. Rental Market Performance – Q1 2025 UK Property Market Update
The UK rental market in Q1 2025 is showing signs of positive adjustment, with annual rent growth slowing to 3%, the lowest in three years. This moderation is reflective of a balance between supply and demand, with an 11% increase in available rental properties and a small dip in tenant demand. Despite this, competition remains strong, with properties still receiving significant interest from prospective tenants. Average UK rents increased by 8.7% in the twelve months to January 2025, but this growth is expected to stabilize at around 3-4% in 2025, ensuring a more sustainable rental environment moving forward. With the introduction of the Renters’ Rights Bill, it’s advisable for landlords to review their costs, including letting and management fees, as well as administrative expenses like inventory, referencing, and tenancy agreement fees. These changes will impact profitability, so assessing and streamlining operational costs now will help landlords maintain a profitable and compliant rental business moving forward.
3. UK Sales Market-Q1 2025 UK Property Market Update
In Q1 2025, the UK apartment market has seen slower capital growth. The current market is price-sensitive, making accurate pricing crucial for sellers. With higher mortgage rates, economic uncertainty, and affordability constraints, buyers are more cautious and have more choice than in previous years. For investors, retaining investments may be the best strategy in the medium term while we wait for market conditions to improve. Mortgage rates are becoming more competitive, and financing options are now available at e.g. 2 year fixed 4.79% on 60% LTV. On a positive note, current market conditions, combined with favourable exchange rates and anticipated interest rate cuts later in 2025, create an opportunity to invest at lower prices, with the potential for stronger returns as the market rebounds.
4. Leasehold Reform in Progress
The Leasehold and Freehold Reform Bill, currently under review in Parliament, is set to bring long-awaited changes to the leasehold system in England and Wales. If passed, the bill will extend standard lease terms to 990 years, eliminate the two-year ownership requirement for lease extensions and freehold purchases, and cap ground rents in existing leases. It will also introduce greater transparency around service charges and provide new routes for leaseholders to challenge unfair costs or practices.
5. Financial Sanctions Compliance. Q1 2025 UK Property Market Update
Starting from 14 May 2025, letting agents will be required to conduct mandatory financial sanctions checks on all landlords and tenants before entering into rental agreements. This involves cross-referencing both parties against the UK financial sanctions list. Letting agents must verify the identities of landlords and tenants to ensure they are not on the sanctions list and establish ongoing monitoring to stay up to date with any changes. Additionally, agents are required to maintain thorough records of the checks carried out to demonstrate compliance in the event of an audit.
6. Energy Efficiency (Private Rented Sector) Bill
The UK government has proposed significant changes to the Energy Performance Certificate (EPC) regulations to improve energy efficiency across buildings. Key updates include raising the minimum energy efficiency standard to an EPC rating of C by 2030. Starting in the second half of 2026, updated EPC metrics will be introduced. These reforms will assess energy performance based on building fabric efficiency, heating system efficiency, and emissions. As we approach 2027, it is advisable for investors to review their EPC ratings and assess whether any upgrades are needed. For investors, who may have purchased units in office conversions, this review is important as these properties may face challenges in meeting energy efficiency standards.
7. Our Services at Walpole and Partners
Walpole and Partners are based in Singapore, which is a valuable layer of service to UK investors who are based in Asia. We offer letting, management, resale, and property acquisition services in London, Manchester, and Birmingham. Our all-inclusive letting and management package starts at 10% plus VAT and includes all core services such as renewals, inventory, referencing, tenancy agreements, deposits, check-ins, and check-outs. This all-inclusive package can save investors up to 1,000 per tenancy. while offer a fully complaint and excellent service. With the forthcoming Renters’ Rights Bill, landlords should be reviewing their letting/management fees due to the potential for higher tenant turnover and increased new tenancy setup costs. The bill’s provisions may lead to more frequent tenant changes, making it essential to align fees with these additional expenses.
7. Walpole & Partners Recognized in Singapore Business Awards
We are proud to have been named Leading UK Property Investment Consultancy 2025 by APAC Insider. This recognition reflects our continued commitment to excellence and the value we provide to our clients navigating the UK property market.
