What landlords should know about expanding their portfolio in 2025
If you're considering growing your buy-to-let portfolio in 2025, understanding changes in the market and regulatory landscape is essential. Here’s a concise overview of what’s coming:
1. The Renters’ Rights Bill (RRB)
Expected to pass in 2025, the RRB will reshape the rental market.
Abolishment of Section 21: Tenancies will shift to periodic agreements.
Ombudsman and Register: Landlords must register and join an ombudsman scheme.
Increased regulation: Fines will rise; bidding wars and discrimination against tenants with pets, children, or benefits will be prohibited.
Navigating these changes will increase costs, and working with a qualified agent can help ensure compliance.
2. Changes to Landlord Insurance
Rising insurance premiums may come with altered terms.
Rent Guarantee Insurance: Scrapping Section 21 affects eviction notice periods and thresholds.
Review policies closely to understand how claim processes may change.
3. Mortgage rates and Loan-to-Value (LTV) limits
If expanding your portfolio will mean you have four or more properties, this will impact mortgage lending, as your total borrowing cannot exceed 75% of your overall portfolio value.
If you’ve bought property in the last couple of years with a mortgage LTV of 80% or more, get an up-to-date valuation on all your buy-to-lets to check you have at least 25% equity.
Although the base rate has been predicted to steadily fall in the coming years, long term mortgage rates may rise in the short term as post the Labour budget, they are expected to fall more slowly.
If you’ve had a five-year fixed rate that’s going to expire in 2025, make sure you know what increase there may be to your monthly payments and stress-test your figures to see what would happen if rates were to rise by 2% or more.
4. Future income and growth
Regularly assess your portfolio’s profitability, considering:
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Maintenance costs (e.g., boilers or roofing).
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Rental income.
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Inflation, with property and rental growth forecasts outpacing it.
Rent growth is expected to be around 17% in the next 5 years, above both inflation and wage growth. Speak to local experts to understand your area’s market trends – there are plenty of areas where investment will reap good rewards.
5. Low supply and high competition
The imbalance between housing supply and demand in the UK continues to support rental prices. With new housing developments not keeping pace with population growth, landlords can often command competitive rental rates, particularly in areas with limited housing stock.
6. Capital growth potential
Despite fluctuations, property values have historically shown long-term growth, particularly in urban and economically thriving areas. Regions like Manchester, Birmingham, and parts of London are experiencing regeneration and infrastructure development, potentially driving future property appreciation in the long-term.
7. Tax planning
The biggest tax change recently for landlords in England was the increase in the higher Stamp Duty rate for additional properties, from 3% to 5%, as of 31st October, which will add to the up-front cost for your next property purchase. It’s also worth noting that from 1st April, the zero-rate threshold for the standard rate will drop back to £125,000, with a 2% rate applied to the portion from £125,001 to £250,000.
Please note: From 11th December, Wales has also changed its Land Transaction Rates “the higher residential rates of Land Transaction Tax applying to purchases of additional residential properties will increase by 1%, raising an estimated additional £7 million in 2025-2026. This change is broadly in line with changes made to Stamp Duty Land Tax in England and Northern Ireland.” This is an additional 5% tax on top of the existing rates.
Although capital gains tax and inheritance tax wasn’t increased for property in the recent Autumn Budget, it’s important to recognise that both these are likely to apply to your property investments in the future. So do make sure you have discussed your plans for selling or passing on your portfolio with a financial adviser or wealth manager, and have taken proper estate planning advice to make sure you and your beneficiaries mitigate tax liabilities down the line.
And if you are reporting property income of more than £30,000 on your self-assessment tax return, a reminder that you must use HMRC’s Making Tax Digital (MTD) to submit quarterly returns online:
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From 6th April 2026 for income above £50,000
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From 6th April 2027 for income of between £30,000 and £50,000
You can sign up to start using the system now, to make sure you’re familiar with it by the deadline – see the latest notes on GOV.UK.
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