Preparing for Success: A Landlord’s Guide to the 2025 Rental Market

As we have entered 2025, the rental market is undergoing significant shifts, presenting both opportunities and challenges for landlords. While the pace of rental growth is beginning to moderate, strong demand and limited supply continue to shape the landscape. This makes now an excellent time to reassess your property or portfolio strategy for the year ahead.

Here’s what you need to know about the current rental market and how to position yourself for success in 2025.

1. Rental Growth Stabilising

After years of rapid increases, rental growth is showing signs of moderation, creating a more stable environment for landlords and tenants alike.

• 2024 Growth Trends: UK rental inflation for new lets currently stands at 9.7% annually, with predictions to slow to 5% by year-end.
• Regional Highlights: Growth in London has slowed to 2%, while regional cities with better affordability are seeing rates of 5-8%.

2. Supply and Demand Still Imbalanced

While the rental market is gradually rebalancing, supply and demand issues persist.

• Demand Remains Strong: Although rental demand has dipped 11% year-on-year, it’s still 32% above the 5-year average. This ensures continued interest in well-maintained rental properties.
• Supply Improvements: Rental stock is slowly increasing, especially in regional markets where affordability remains a key driver.

3. Affordability Challenges for Tenants

Rising rents continue to outpace income growth in many areas, putting pressure on tenants and shaping market trends.

• London Impact: Renters in London spend an average of 40.2% of their income on rent, compared to the UK average of 28.4%.
• Market Adjustments: In some areas, asking rents are being reduced by 5% or more, particularly for properties in the £1,000–£1,500 per month range.
• Landlord Opportunity: Adjusting rental prices to reflect local conditions can help retain tenants and minimise void periods.

4. Regional Markets Driving Growth

While rental growth in London and the South is slowing, regional markets remain resilient.

• Hotspots: The Midlands, the North, and Scotland continue to experience strong demand and upward rental trends due to better affordability.
• Action Plan: Landlords in these areas can benefit by ensuring properties are well-maintained and competitively priced.

How to Maximise Your Portfolio in 2025

With the market cooling slightly, now is the ideal time to optimise your rental properties and portfolio.

• Stay Competitive: Regularly review your rental pricing, property condition, and tenant experience to attract and retain high-quality tenants.
• Ensure Compliance: With regulations tightening, maintaining legal compliance is more critical than ever.
• Strategic Growth: Explore opportunities to expand your portfolio in regions with strong demand and growth potential.

Expert Support to Optimise Your Investments

At Higson Homes, we’re dedicated to helping landlords navigate the ever-changing rental market. Whether you’re looking to review a single property or an entire portfolio, our experienced team can provide tailored advice to help you maximise your returns.

Let’s work together to position your investments for success in 2025. Contact us today for expert guidance and support.