2025 is expected to be a game-changing year for housing sales and rentals.
According to Propertymark boss Nathan Emerson, the housing sector “is about to embark on some of the biggest changes seen in 30 years”.
And in a recent webinar, Reapit’s Commercial Director Neil Cobbold and Malcolm Driscoll, Lead AML Consultant at FCS Compliance, walked agents through the seismic impact of the Renters’ Rights Bill and the compliance obligations that come with it.
What is happening this year, and how much of a difference will it make?
Renters’ Rights Bill completes passage through Commons
The Renters’ Rights Bill returned to Parliament for its report stage and third reading this week. The vote following the third reading was passed with a strong majority, meaning the bill will now go to the House of Lords for further scrutiny.
During this stage, the government amended the bill to prevent landlords from taking more than one months’ rent in advance. That will reduce the amount of money tenants may have to pay up front, but landlord and agent groups have warned that riskier tenants or those with unreliable incomes – such as self-employed people and students – could be locked out of renting. However, housing secretary Matthew Pennycook argued that referencing, affordability checks and guarantors should give landlords enough security.
Speaking of guarantors, a further amendment will prevent them from being held liable for unpaid rent after a tenant dies. And the government has also put the information that landlords will have to provide to the Private Rental Sector Database into an amendment: the name, address and contact details of themselves and their agent, details of any eviction notices they have served to tenants, and any enforcement action taken against them or their agents. Both the database and the new Private Rented Sector Ombudsman will be funded by landlord fees.
However, amendments limiting rent increases were rejected. Pennycook said that introducing rent controls would harm tenants as well as landlords by reducing housing supply. As it stands, the Renters’ Rights Bill will give tenants more powers to challenge rent increases.
Peers in the House of Lords will now have their own chance to amend and vote on it. While we don’t yet know how long that will take, the bill’s quick progress through the Commons puts it well on track to become law this year. Housing Secretary Angela Rayner has said that she wants to get it passed “as soon as possible”. Neil Cobbold, Commercial Director at Reapit, previously expected the bill to be passed in time for Parliament’s summer recess on 22 July, but believes we may now see it gaining royal assent as soon as the end of March. In that case, some of the bill’s amendments could be in effect before the summer recess, although other provisions rely on secondary legislation that will have to be passed later.
The bill will have a sweeping effect on the private rented sector, ending fixed-term tenancies; radically overhauling the eviction process; creating a new Private Rented Sector Ombudsman; doubling the registration time limit and maximum fine for Rent Repayment Orders; and requiring landlords to go through a legal process to increase rent.
In financial terms, it is expected to cost letting agents almost £400 million over the next decade. Landlords will also face increased costs, and many may decide to leave the sector entirely.
Leasehold reform
The Housing Secretary also committed to introducing leasehold reform legislation this year, a move that could potentially unlock more sales of flats and other leasehold properties. However, she also warned the Housing, Communities and Local Government Committee that the government wants to take care to avoid unintended consequences.
Last year, the government set out a timeline for their leasehold reform plans. The first order of business is to pass secondary legislation for last year’s Leasehold and Freehold Reform Act. This month, the government plans to allow leaseholders to buy their freehold or extend their lease immediately instead of having to wait two years. In the spring, more leaseholders will be given the option of taking over their freehold using Right to Manage. And the government’s Leasehold and Commonhold Bill is expected in the second half of the year.
First-time buyers’ Stamp Duty scramble
First-time buyers have until the end of March to complete their purchases before lower Stamp Duty thresholds kick in. From April, they will pay tax on properties worth £300,000 or more, down from £425,000 currently. Estate agents reckon that the peak of the rush is now past, but that sales volumes will be elevated for the first three months of the year. That’s good news for first-quarter targets, but it could mean a relatively suppressed sales market for the rest of 2025.
Loosening LISA rules?
The Lifetime ISA (LISA) is a popular savings option for first-time buyers as it offers a 25% government bonus on up to £4,000 of savings per year, plus tax-free interest. Currently 1.5 million people have one. But they can only be used to buy a property worth less than £450,000, and that amount hasn’t been adjusted since the LISA launched nine years ago – meaning that it covers fewer properties every year, especially in London and the South East. Withdrawing money also comes with heavy penalties unless it is for a qualifying first-time property purchase or retirement.
Now the Treasury Committee has launched a review of LISAs to decide if they are still fit for purpose. As part of this, they will consider increasing the contribution limit and adjusting or scrapping the price cap, both of which would make it easier for first-time buyers to get onto the housing ladder.
But they are also looking into whether the LISA scheme gives the government value for money, and will consider limiting eligibility or scrapping it altogether. The Treasury Committee’s call for evidence is open now and will close on 4 February 2025.
Other regulation headlines
Tenant Fees Act ‘a success’ by saving renters £400 per tenancy – The Negotiator
Land Registry strike to cause ‘huge problems’ ahead of stamp duty changes – Property Industry Eye
Leasehold property listings miss out vital facts – LandlordZONE
