The UK property market is evolving. With new legislation set to impact both the residential and commercial markets in the near future, homeowners, landlords and renters are all anticipating how a new landscape could affect their property plans.
House prices are one of the most common indicators of property industry activity and are often keenly tracked as a barometer of market health.
House prices in the UK have continued to rise since March 2024, with both the Royal Institution of Chartered Surveyors (RICS) and Rightmove reporting a further rise in house prices in their most recent reporting (1).
It should be noted that house price growth varies across the UK, with Northern Ireland and the North East of England showing the strongest momentum during early 2025.
RICS also notes that near-term growth rates have flattened slightly, which could be attributed in part to a seasonal slowdown in market activity coupled with the high levels of choice currently available to buyers.
A further key driver of house prices has been the announcement of changes to stamp duty rules.
Revised stamp duty land tax (SDLT) regulations will take effect in April 2025. The price point at which buyers must pay SDLT will be lowered from £250,000 to £125,000.
For example, buyers who purchase a property valued at £250,000 on or after 31 March 2025 will pay an additional £2,500 in SDLT.
First-time buyers will also be impacted by the introduction of new tax regulations. The nil rate threshold for first-time buyers will drop from its current rate of £425,000 to £300,000.
Those purchasing a property valued between £300,001 and £500,000 will pay SDLT of 5%, which means a bill of around £5,000 for a home purchased after April 2025. Furthermore, the cap at which First-Time Buyers Relief can be claimed will drop from £650,000 to £500,000.
This increase in the cost of buying a home could impact house prices as buyers reevaluate how much they can afford to spend on a property. This is already impacting the market, as the growth in house prices has slowed in recent weeks according to RICS in its January Residential Market Survey.
Following a period of increased buyer enquiries, RICS also suggests that buyer interest has plateaued during the start of the year, suggesting that aside from those acting quickly to complete their property purchases before the April deadline, buyers are waiting for the deadline to pass before committing to buying a new or first home.
The Leasehold and Freehold Reform Act 2024 is set to introduce further changes to the property market.
The act is intended to strengthen homeowners’ rights through several reforms that will make it easier to buy or extend their leaseholds. Furthermore, the act will ultimately ban the granting of new leasehold houses (with some exceptions).
Although it became law in 2024 under the previous Conservative government, its main provisions rely on secondary legislation and have yet to come into effect. The current Labour government has announced that it is committed to pushing forward with leasehold reform, with commonhold ownership becoming the default by 2030.
In January 2025, the government removed the two-year restriction on property owners buying or extending the lease from the point of purchase of their home.
As of March 2025, more leaseholders in mixed-use buildings will qualify for the ‘Right to Manage’ and remove the requirement for leaseholders to cover the legal fees of their leaseholder when making a Right to Manage claim.
Right to Manage (RTM) is a provision that allows leaseholders living in apartment buildings to take control of the building by forming a RTM company and manage things like maintenance, repairs, building insurance and services themselves. More information about Right to Manage can be found at the Commons Library.
The rental market is undergoing significant change, with implications for both renters and landlords.
Labour’s 2024 Autumn Budget introduced immediate changes to SDLT for second homes. The basic rate of stamp duty for second homes was increased to 5%, while homes in higher cost brackets were subject to similar rises.
This, in conjunction with the hotly anticipated arrival of the Renters’ Rights Bill, has caused landlords to reconsider the profitability of their property portfolios with some choosing to exit the rental market altogether.
The Renters’ Rights Bill is currently at committee stage within the House of Lords, meaning that it is moving ever closer to achieving Royal Assent.
The bill contains several changes that will fundamentally change existing rental rules across the UK. One of the most notable changes contained within the bill is the abolition of Section 21 ‘no fault’ evictions.
Section 8 evictions will remain in a modified state to continue to allow landlords to take control of properties for reasons of habitation, sale or rent arrears.
The bill will also introduce changes to the required standard of rental accommodation. The Decent Homes Standard will be applied to the private rental sector, as will Awaab’s Law, meaning that landlords with properties that do not meet these standards will need to invest in improvements if they wish to continue to let their properties.
Although not part of the Renter’s Rights Bill, the government is also planning to introduce new regulations relating to Energy Performance Certification (EPC) for rental properties.
Currently rental properties are required to have an EPC rating of ‘E’ or above. The government has announced plans to introduce new rules requiring rental homes to have an EPC rating of ‘C’ or above by 2030. Properties that fall short of this target will be regarded as unrentable.
It is currently estimated that over two-thirds (67%) of landlords currently own at least one property that does not meet the new requirements for the government’s proposed EPC ‘C’ targets.
It is currently not known when these changes are expected to become law, but most analysts agree that these changes could come as soon as 2026, meaning that landlords will need to move quickly to either make the required changes to their properties or divest their assets.
According to the latest RICS residential market survey, house prices, property instructions and sales all increased in January 2025, although at a slightly lower rate than in recent months.
One of the report’s most striking insights is the leveling out of buyer enquiries in the run up to the SDLT change deadline. It appears that buyers are waiting to see how their finances will be impacted by the increase in stamp duty before committing to making a new purchase.
Changes to property regulation are already having a pronounced impact on the rental market. Demand for rental property has remained high despite a season drop during the run up to Christmas and the New Year.
The biggest change to the lettings market has been to the number of properties available to rent. Many landlords are reevaluating their investment strategies or have even decided to exit the rental market altogether, which has led to a fall in the number of new landlord instructions.
The positive news for landlords is that while many have decided to exit the market, those who remain are benefiting from a wide base of stock for future investments.
The auction market has continued to demonstrate its effectiveness in allowing investors to grow their portfolios quickly, although landlords will face increased competition from first-time buyers who are also beginning to take advantage of the former rental properties coming to market.
You can learn more about the current health of the auction market by reading our latest auction success blog on the link below.
Edward Mellor has been helping people to buy and sell property for over 40 years. The market has changed significantly over the decades, but our commitment to delivering an unrivalled experience whilst ensuring all our customers’ property and financial needs are met hasn’t.
Whether you are looking to buy or sell a home, learn more about the auction market, or discuss your mortgage options with our experienced team of brokers, we’re here to support the local community at every step of their property journey.
To learn more or to arrange a friendly chat, simply contact us using the link below.
1 – RICS UK Residential Market Survey January 2025 & Rightmove House Price Index
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