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Category: prs
2024 has been a year marked by significant shake-ups in the Private Rented Sector (PRS) and many other sectors. A change in government, two cuts to the Bank of England (BoE) Base Rate, and many other factors have influenced this.
With 2025 just around the corner, we take a look back at how this year has gone for the buy to let and commercial property sectors, and what could be on the horizon.
A changing of the guard
The Conservative Party were wiped out in the 2024 General Election, bringing an end to their 14 years in power.
Sir Keir Starmer subsequently became the first Labour Prime Minister since Gordon Brown. Since the lead-up to the election, Labour’s PRS policies have been controversial among landlords.
Historically, Labour often advocate for economic ‘underdogs’ of society. Following this trend, Labour have been perceived as heavily pro-tenant in their PRS policies, at the apparent expense of landlords.
Several months after the election, studies have suggested that a large proportion of private landlords disapprove of Labour, including the ones who voted them in.
Changes to regulations
Following the example of the Tories’ conceptually similar Renters (Reform) Bill, Labour drafted up the Renter’s Rights Bill. The Tories’ Renters (Reform) Bill never made it through parliament, not least due to their election loss preventing them from fulfilling it.
However, current leader of the opposition Kemi Badenoch has said that the Renters (Reform) Bill was fundamentally flawed from the start and has argued against Labour’s pursuit of a similar agenda.
One particular policy in the Renter’s Rights Bill threatens to upend how private landlords conduct their business: the removal of Section 21 ‘no-fault’ evictions.
The Renter’s Rights Bill has had several readings in parliament, and each brings it a step closer to being put into law. However, that is not expected to happen until summer 2025 at the earliest.
As such, 2025 may have a much more radical change of landscape in store. It’s hard to predict what the PRS will look like once Section 21 is history, though one thing seems quite likely – landlords may face new difficulties in evicting tenants and regaining full control over their properties.
In addition, Labour have pushed for improved housing standards in the PRS, basing their criteria on the contentious Energy Performance Certificate (EPC) system. The government want all private properties to reach at least a ‘C’ grade on their certificates.
Responses to these proposed changes among private landlords have been largely negative, but Labour seem quite determined to get the Renters’ Rights Bill through parliament with their main agendas intact.
Base Rate cuts
After many months of the BoE Base Rate staying at the same level, 2024 marked a point that the BoE’s Monetary Policy Committee (MPC) finally felt comfortable with making small cuts.
The first of these cuts occurred in August, bringing it down from 5.25% to 5%. It sent major waves throughout the UK economic spheres. Many were enthusiastic about the potential for future cuts later in 2024.
However, several MPC members referred to their general principle of not wanting to cut the Base Rate too quickly. Despite this, it was still heavily speculated that we would see at least one further cut by the end of 2024.
Lo and behold, another cut happened in November, reducing it to 4.75%, where it still sits. But for how much longer? It’s widely predicted that the Base Rate may drop to 4% in 2025.
Some mortgage lenders were influenced to increase their rates and pull products, but not all of them did. There was also no evidence of rates falling across the board to any significant degree.
Nevertheless, any big decision by the BoE justifiably attracts attention and impacts individual buyers’ decisions.
After the news, some landlords wanted to exercise caution and wait before finalising their mortgage plans. Others were galvanised to pick up a low rate deal as soon as possible, before things potentially swerve against their favour.
New year, new opportunities?
The buy to let sector shows some promising signs for 2025.
There’s huge rental demand out there, especially for more complex property types like HMOs (House of Multiple Occupancy) and MUFBs (Multi Unit Freehold Block), and that may drive rents upwards, making them even more attractive investment vehicles.
More property investors are looking to refurbish older properties and convert commercial spaces into rental properties. This reflects how resilient and strategic landlords are being with their investments.
As said, the Base Rate appears to be on the BoE’s chopping block, with gradual cuts expected throughout next year. This should spurn some interesting activity in the mortgage market, potentially giving landlords more competitive rates to choose from.
With all that said, we want to wish you all a Happy New Year, and we look forward to helping many customers, old and new!
