Property Market in 2025

Happy New Year one and all, hope 2025 brings you good fortune!

Last year we wrote the Renters Reform Bill was being debated and a year later this still continues to be the case! We continue to anticipate the bill will come into force at some point in the year but when, is anybody's guess.

Many were anticipating to see an increase in Capital Gains, which would have hit the property market hard, thankfully it didn't. But we have seen the BTL market cool down due to the last minute surprise increase on Stamp Duty on second homes / investment properties.

Labour is doing what it can to get more First Time Buyers on to the housing ladder with a current freeze on Stamp Duty thresholds but this will end in April 2025. For this reason we are seeing a lot of activity in the bottom end of the market.

We still continue to see interest rates being heavily influenced by inflation data, which dropped to less than 2% in Q4 in 2024, but increased slightly to 2.6% in December 2024. Now that inflation is nearly meeting The Bank of England's target, it is likely that interest rates will continue to fall throughout 2025. We don't know how many cuts to expect but some experts are predicting one drop every quarter, we will just have to wait and see.

This also reflects what we saw in Q4 2024 in the mortgage market with lenders under cutting each other towards the end of the year. Should interest rates continue to fall into 2025, which is likely, then expect to see the same behaviour in the mortgage market.

Labour have pledged to build 1.5 million homes over the next 5 years - can they deliver on this? The simple answer is no!

Although we anticipate many councils to relax planning laws and release green belt land for new development to meet their housing targets in 2025. These new homes will not come online for the next few years so we expect the main focus to still be on the lettings market.

Rental growth continues to increase and the base rate continues to come down. And with more landlords exiting the market this continues to increase rental prices as stock is ever dwindling. This is good news for long-term investors!

If you already have a portfolio, make sure you’re getting market rent. If you are not, now is the time to be reviewing your portfolio and getting those increases and disposing of under performing properties.

If you are a First Time Buyer you may want to wait for mortgage rates to come down a bit more before making your first purchase.

In summary with a shortage of property, increasing population, limited supply of land available to build on. Prices are only heading in one direction. As we wrote last year it is hard to argue that buying a property in London is a smart investment.

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